Spencer v. Allpress Logging, Inc.

Decision Date12 September 2000
Docket NumberNo. 24951.,24951.
PartiesJustin SPENCER, Claimant-Cross Appellant, v. ALLPRESS LOGGING, INC.; Jim and Cheryl Allpress, husband and wife, dba Allpress Logging, Inc., Defendants, and Weyerhaeuser, dba Triple R. Logging, Defendant-Cross Respondent, and Steven R. Schilling, Defendant.
CourtIdaho Supreme Court

Grow & Arnold, PLLC, Lewiston, for appellant. James C. Arnold argued.

Evans, Keane LLP, Boise, for respondent. Paul J. Augustine argued.

KIDWELL, Justice.

This case arises from an injury received during a logging operation. The claimant contends that the lumber mill, which purchased the logs, was the statutory employer of the claimant and is thus liable for the claimant's worker's compensation benefits. We agree.

I. FACTS AND PROCEDURAL BACKGROUND

Steve Schilling acquired over 1200 acres of land in North Idaho between 1991 and 1994 valued between $500,000 and $600,000. Schilling purchased these properties by entering into timber sales contracts with different timber mills. One of these properties, known as the Greer Grade property, involved the sale of timber to two separate mills.

Schilling purchased the Greer Grade property for $200,000 in August of 1992. Prior to closing escrow on the Greer Grade property, Schilling contacted several mills to arrange for the best price for the timber on the property. The two mills Schilling ultimately contracted with were the Triple R (a former wholly owned subsidiary of Weyerhaeuser) and Columbia Vista. Columbia agreed to purchase the Douglas fir and Weyerhaeuser agreed to purchase the Ponderosa pine. Both of these mills agreed to advance Schilling $100,000 (secured by the timber on the land) which he used to purchase the property.

Under each of the separate contracts with Weyerhaeuser and Columbia, Schilling was required to harvest the timber and deliver it to their respective mills. The contract between Schilling and Weyerhaeuser provided that Weyerhaeuser would advance Schilling $100,000 and in return Weyerhaeuser would have the right to cut and remove Ponderosa pine from Greer Grade. Additionally, the contract provided that when Schilling delivered timber to Weyerhaeuser, a portion of the contract price would be used to reduce the advance and a portion would be allocated to cover the cost of harvesting the timber. The contract had an ending date of April 1, 1993. If during that time Schilling delivered more than the $100,000 advance, Weyerhaeuser would pay Schilling at the contract rate. If, on the other hand, Schilling did not completely pay off the advance by that date, Weyerhaeuser would have the right to reimbursement of the unpaid balance. At that time the rights to the remaining timber would revert back to Schilling. The contract also provided that Weyerhaeuser would assume the risk of loss during the contract period, and that in addition to the right of ingress and egress, Weyerhaeuser would have the right to build and maintain roads on the property as needed to remove timber.

Schilling's agreement with Columbia was similar to the one with Weyerhaeuser. Schilling was to pay off the $100,000 advance by Columbia by delivering Douglas fir from the Greer Grade property. Columbia had the same rights of ingress and egress, and to build roads as needed. Like the Weyerhaeuser contract, a portion of each delivery to Columbia would be used to pay off the advance, and a portion would be used to pay Schilling for the cost of harvesting the timber. Unlike the Weyerhaeuser contract, however, the Columbia contract did not have a specific ending date. Rather it provided that the contract would end when full delivery had been made.

Schilling contracted with James Allpress of Allpress Logging to cut and deliver the timber to both Weyerhaeuser and Columbia. During the logging, Allpress exclusively used his own equipment, with the exception of Schilling's Caterpillar tractor which was used as a "deadman." Allpress hired, instructed and paid his own employees without any involvement from Schilling, Weyerhaeuser or Columbia. On all but two occasions, checks were issued from Weyerhaeuser and Columbia directly to Schilling who deposited them into his personal account. Schilling would then pay Allpress out of this account. Twice, Weyerhaeuser made a draw (an advanced payment) for harvesting costs. For these two draws, Weyerhaeuser issued the checks to both Schilling and Allpress. Schilling endorsed the checks, and Allpress cashed them.

The logging operation began in October or November of 1992 and continued until shortly after the accident on September 9, 1993. On that date, one of Allpress's employees, claimant Justin Spencer, was severely injured when the line machine he was operating tipped over on top of him. At the time of the accident neither Allpress nor Schilling had worker's compensation insurance coverage for Spencer.

Allpress testified in his deposition that the logs which were being pulled up the hill at the time of the accident were consistent with those going to Weyerhaeuser. Although the matter was never conclusively decided by the Industrial Commission, there was no evidence presented to indicate that the logs were going to Columbia Vista.

Because Schilling was unsatisfied with the progress of the logging, he directed Allpress off the property prior to the completion of either timber contract. Schilling and his father then worked from the fall of 1993 through the spring of 1994 to complete the contracts.

Because of delays in the logging process, Weyerhaeuser extended the contract deadline twice. Both of the extensions were granted during the time that Allpress was logging on the property. On March 26, 1993, the deadline was extended to around June 1, 1993, then on July 14, 1993, the contract was extended to August 1, 1993.

Schilling, however, did not complete delivery prior to August 1, 1993. He and his father continued to make deliveries and Weyerhaeuser continued to accept deliveries under the terms of the original contract through the spring of 1994. When the original contract was completed, Schilling and Weyerhaeuser entered into another timber sale agreement. Schilling used part of these proceeds to pay off the outstanding balance owed to Columbia. All timber harvesting concluded by June or July of 1994.

During the logging process, representatives from Weyerhaeuser made several visits to the Greer Grade property. Most of these visits were to check the progress of the logging and to check for weathering conditions on the felled logs. Columbia also made similar visits to the property. During each of the visits by representatives of either Weyerhaeuser or Columbia, the representative would contact only Schilling, and did not provide any logging instruction to either Schilling or Allpress.

Spencer filed a worker's compensation complaint on December 6, 1993. On November 29, 1995, the Industrial Commission held a hearing. On December 13, 1996, the Industrial Commission announced a two to one decision1 that (1) Allpress was personally liable for Spencer's worker's compensation benefits, (2) Schilling was Spencer's statutory employer and thus personally liable for Spencer's worker's compensation benefits, and (3) Weyerhaeuser was also a statutory employer of Spencer's and was also liable for his worker's compensation benefits. Commissioner Gilbert dissented on the basis that the Idaho Code should not be interpreted as being so broad as to include Weyerhaeuser simply because it purchased raw materials from Schilling.

Spencer moved for reconsideration. On July 21, 1998, the Industrial Commission entered an order on reconsideration which reversed and vacated its prior order. The second order of the Commission held that Allpress and Schilling were still liable for Spencer's worker's compensation benefits, but that Weyerhaeuser was not liable as a statutory employer. On August 31, 1998, Schilling filed a notice of appeal. Spencer filed a notice of cross appeal on September 3, 1998. On January 21, 1999, this Court granted Schilling's motion to dismiss his appeal, leaving Weyerhaeuser to respond only to Spencer's cross appeal.

II. STANDARD OF REVIEW

When this Court reviews a decision from the Industrial Commission, it exercises free review over questions of law, but reviews questions of fact only to determine whether substantial and competent evidence supports the Commission's findings. Ogden v. Thompson, 128 Idaho 87, 88, 910 P.2d 759, 760 (1996). Substantial and competent evidence is "relevant evidence which a reasonable mind might accept to support a conclusion." Boise Orthopedic Clinic v. Idaho State Ins. Fund (In re Wilson), 128 Idaho 161, 164, 911 P.2d 754, 757 (1996).

Whether an injury arose out of the course of employment is a question of fact to be determined by the Commission. Kessler ex rel. Kessler v. Payette County, 129 Idaho 855, 859, 934 P.2d 28, 32 (1997). The Commission's conclusions on the credibility and weight of evidence will not be disturbed unless the conclusions are clearly erroneous. Zapata v. J.R. Simplot Co., 132 Idaho 513, 515, 975 P.2d 1178, 1180 (1999). On appeal, this Court is not to re-weigh the evidence or consider whether it would have reached a different conclusion from the evidence presented. See Warden v. Idaho Timber Corp., 132 Idaho 454, 457, 974 P.2d 506, 509 (1999)

.

III. ANALYSIS
A. Schilling's Continued Delivery Of Logs To Weyerhaeuser Under The Same Terms And Conditions Of The Expired Written Contract Represented An Implied-In-Fact Extension Of The Contract.

Weyerhaeuser argues that its purchase of the timber from Schilling was under an open-market type of agreement and therefore Weyerhaeuser could not be a statutory employer. After reviewing the record on appeal, and considering oral argument, we have determined that the contract under which Schilling and Weyerhaeuser were operating was a timber sale contract.

Spencer argues that Schilling and...

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