Swiezynski v. Civiello

• Decision Date: 21 February 1985
• Docket Number: No. 84-132,84-132
• Citation: 126 N.H. 142,489 A.2d 634
• Parties: Margaret SWIEZYNSKI v. Rocco V. CIVIELLO and William B. Crawford.
• Court: New Hampshire Supreme Court

Page 634

489 A.2d 634

126 N.H. 142

Margaret SWIEZYNSKI v. Rocco V. CIVIELLO and William B. Crawford.

No. 84-132.

Supreme Court of New Hampshire.

Feb. 21, 1985.

Winer, Pillsbury & Bennett, Nashua (Peter G. Webb, Brookline, on brief and orally), for plaintiff.

Sheehan, Phinney, Bass & Green, P.A., Manchester (Douglas G. Verge, Manchester, on brief and orally), for defendants.

BATCHELDER, Justice.

The issue before us is whether a partnership employee who has received workers' compensation benefits for an injury received in the course of employment may maintain a negligence action against an individual partner who owns the work premises for this same injury. The resolution of this issue turns on whether an individual partner is an employer under the Workers' Compensation Law, RSA chapter 281 (Supp.1983), and thereby is entitled to immunity from certain employee suits. See RSA 281:2, I, :12 (Supp.1983).

The plaintiff, Margaret Swiezynski, was employed as a grocery clerk at the Garden Street Superette in Milford. The grocery store was operated by the defendants, Rocco V. Civiello and William B. Crawford, as a partnership. The premises were owned by the defendants individually as tenants in common. On March 16, 1981, the plaintiff was injured when she fell in the store. The plaintiff subsequently received workers' compensation benefits for her injuries. She thereafter filed the instant action against the defendants, alleging that her injury resulted from a breach of a duty of care owed to her by each of the defendants as the landowners.

Without consulting the partnership agreement between the defendants, the Superior Court (Wyman, J.) dismissed the plaintiff's suit, holding that the individual defendants are immune from the plaintiff's suit because they are employers within the meaning of the statute. We vacate this order and remand for further findings of fact.

In Holzworth v. Fuller, 122 N.H. 643, 645, 448 A.2d 394, 395 (1982), we held that an employer's provision of workers' compensation insurance insulated the employer-landowner from a suit which alleged that the employee's injury had resulted from the employer's breach of his duty of care arising from his ownership of the premises. Whether the plaintiff may maintain her claims depends on whether the defendants are employers under the statute and thereby enjoy protection under Holzworth.

Under the Workers' Compensation Law, "employer" is defined as "a person, partnership, association, corporation, or legal representative of a person, partnership, association or corporation, who employs one or more persons ...." RSA 281:2, I (Supp.1983) (emphasis added). We find that, for purposes relevant here, a partnership has no legal identity distinguishable from its partners who have retained their statutory rights of management and hence that such partners qualify as employers under the statute. Our holding is necessitated by the Workers' Compensation Law's conception of what constitutes an employment relationship and by the statute's underlying policy. Our conclusion that a partnership does not, in this context, constitute a legal entity distinguishable from its partners is consistent with New Hampshire partnership law, case law under the Workers' Compensation Law, and the decisions of the vast majority of the jurisdictions that have considered this question.

The Workers' Compensation Law refers to a private employment relationship as "any contract of hire, express or implied, oral or written...." RSA 281:2, III (Supp.1983); see 1C A. Larson, The Law of Workmen's Compensation § 43.10, at 8-1 (1982) (stating that workers' compensation acts typically define an employment relationship as "any contract of hire, express or implied"). Such a contract confers on the employer a right to the labor of the employee and on the employee a corresponding right to compensation. 1C A. Larson, supra at § 47.41, at 8-255-8-259.

The dispositive characteristic of the employer's status is his right to control the employee's work performance. See Porter v. Barton, 98 N.H. 104, 105, 95 A.2d 118, 119 (1953) (evidence of employer's right of control warranted finding of employment relationship under workers' compensation act); see also Brinkley Heavy Hauling Co. v. Youngman, 223 Ark. 74, 77, 264 S.W.2d 409, 411 (1954); 1C A. Larson, supra at § 44.00, at 8-31; Restatement (Second) of Agency § 220(1) (1958). Under the Workers' Compensation Law, the distinguishing features of an employment relationship, therefore, are the employer's right to the employee's labor and his right to control the employee's performance and the employee's corresponding right to compensation.

Under New Hampshire law, these features are present in the relationship between a partner and a partnership employee. Unless the partnership agreement provides otherwise, partners by law have "equal rights in the management and conduct of the partnership business." RSA 304-A:18, V (Supp.1981). Consequently, each partner has an equal right to control the work performance of a partnership employee. See J. Crane and A. Bromberg, The Law of Partnership § 50(c), at 284 (1968) (stating that a partner has implied power to hire, discharge, and compensate a partnership employee). Partners are personally liable for partnership obligations, RSA 304-A:15 (Supp.1981), including an employee's claim for compensation. See Mazzuchelli v. Silberberg, 29 N.J. 15, 21, 148 A.2d 8, 11 (1959).

As the Supreme Court of New Jersey stated in a similar case, "we cannot conceive of any incident of the employer-employee relationship which is here lacking." Id. at 22, 148 A.2d at 11. Professor Larson is in accord:

"[I]n any ordinary partnership each partner has by law an equal share in management, and is therefore in actual possesion of the powers of the employer. Unless he has contracted away these powers, which he can theoretically do, he is as much the employer as anyone can be, not as a matter of conceptual reasoning but as a matter of actual functions and rights."

1C A. Larson, supra at § 54.32, at 9-202-9-203 (emphasis added). Accordingly, we hold that a partner retaining his right of management is in an employment relationship with a partnership employee and, thus, constitutes an employer under the Workers' Compensation Law.

The Workers' Compensation Law balances the interests of the employee against those of the employer. The employee receives a right to receive insurance benefits for work-related injuries in exchange for his forfeiture of his corresponding rights of action against the employer; the employer receives statutory immunity from employee suits in exchange for his provision of insurance benefits. See RSA 281:12 (Supp.1983); Reed v. New England Telephone & Telegraph Co., 175 F.Supp. 409, 410 (D.N.H.1958), aff'd, 336 F.2d 90 (1st Cir.1964); 1 A. Larson, supra at § 1.10, at 1-2. Under New Hampshire law, partners are personally liable for all debts of the partnership, RSA 304-A:15 (Supp.1981), including the liability for workers' compensation insurance.

To construe "employer" not to include individual partners would require partners to endure the liability for compensation insurance without the enjoyment of the corresponding benefit of immunity from employee suits. This construction would frustrate the policy underlying the Workers' Compensation Law. Where reasonably possible, a statute should be construed to effectuate its underlying policy. See Hurley v. Public Service Co. of N.H., 123 N.H. 750, 754, 465 A.2d 1217, 1220 (1983). Construing the term "employer" to include individual partners, therefore, is preferable because it gives force to a policy central to the act. See Brown v. South Broward Hospital Dist., 402 So.2d 58, 59 (Fla.App.1981) (employee suit immunity held to be "coextensive" with liability for compensation insurance).

The Uniform Partnership Act ("UPA"), RSA chapter 304-A (Supp.1981), which states the law governing partnerships in this State, is instructive on the issue before us. The UPA commingles the entity theory, which regards a partnership as an independent legal entity, with the aggregation theory, which holds that a partnership has no such independent status. The plaintiff asks us to extrapolate from the UPA's partial adoption of the entity theory the conclusion that a partnership is a distinct legal entity for the purposes relevant here. We are mindful, however, that "[u]ltimately it is not too important whether a specific result directed by the uniform law is dressed in garb of the entity concept, provided the fictional personification is confined to the specific result and is not used as a premise for syllogistic thrusts elsewhere." Mazzuchelli v. Silberberg, supra 29 N.J. at 21, 148 A.2d at 11.

A partnership is not considered an entity separate from its members, except in limited circumstances. See Sonberg v. Bergere, 220 Cal.App.2d 681, 682, 34 Cal.Rptr. 59, 60 (1963); Carlson v. Carlson, 346 N.W.2d 525, 526-27 (Iowa 1984); Candler v. Hardware Dealers Mut. Ins. Co., 57 Wis.2d 85, 87-88, 203 N.W.2d 659, 660 (1973). The entity theory governs only in matters of procedure, see, e.g., RSA 304-A:11, :12, :27, :28, :30 (Supp.1981), and in the holding and conveyancing of property, see, e.g., RSA 304-A:10, :24 to :26 (Supp.1981), including the marshalling of assets, see RSA 304-A:40, VIII, IX (Supp.1981). See Carlson v. Carlson supra; Mazzuchelli v. Silberberg supra; Candler v. Hardware Dealers Mut. Ins. Co. supra.

The aggregation theory controls in matters relating to the substantive liabilities and duties of the partners. Carlson v. Carlson, supra at 526; Mazzuchelli v. Silberberg, 29 N.J. 15, 21-22, 148 A.2d 8, 11 (1959). Our statute defines a partnership as "an association of two or more persons to carry on as co-owners a business for profit." RSA 304-A:6 (Supp.1981) (emphasis added). "To state that partners are co-owners of a business is to state that they each have the power of ultimate control."...