Terry by Terry v. Read Steel Products

• Decision Date: 01 April 1983
• Parties: Rodney Austin TERRY, a minor, who sues by his parent and next friend, Austin Garland TERRY v. READ STEEL PRODUCTS, a Corporation. 81-348.
• Court: Alabama Supreme Court

Page 862

430 So.2d 862

Rodney Austin TERRY, a minor, who sues by his parent and next friend, Austin Garland TERRY v. READ STEEL PRODUCTS, a Corporation.

81-348.

Supreme Court of Alabama.

April 1, 1983.

James T. Collins and Edward L. Hardin, Jr., Birmingham, for appellant.

Stanley A. Cash and Frank E. Lankford, Jr. of Huie, Fernambucq & Stewart, Birmingham, for appellee.

ALMON, Justice.

In June of 1977 Rodney Terry, a minor, commenced work on a summer job at Read Steel Products, Inc. (Read Steel). While engaged in this employment, Terry was injured when his hand caught in a machine he was operating. As a result of the injury, Terry sought to receive workmen's compensation benefits from Manpower, Inc., an employment agency which provided Read Steel with temporary laborers.

Subsequently, Terry's father filed a third-party action on behalf of his son against Read Steel and Edsell Pearce, a co-employee of Terry's. We are not here concerned with the co-employee action. CNA Insurance, the insurance carrier for Manpower, was allowed to intervene and seek recovery for the amount paid in settlement of Terry's workmen's compensation claim.

Read Steel filed a motion for summary judgment based upon its immunity as an employer under the Workmen's Compensation Act. The trial judge ruled in favor of Read Steel. Judgment was made final under Rule 54(b), A.R.C.P., and Terry appealed.

The issue presented is whether an employer-employee relationship, within the meaning of the Alabama Workmen's Compensation Act, existed as a matter of law between Read Steel and the plaintiff's minor son, Rodney Terry. If, when Terry was injured, Read Steel was Terry's "employer" for purposes of workmen's compensation liability, then Terry's tort claim against Read Steel is barred by Code 1975, § 25-5-53. That section provides in pertinent part:

"The rights and remedies herein granted to an employee shall exclude all other rights and remedies of said employee, his personal representative, parent, dependents or next of kin, at common law, by statute or otherwise on account of said injury, loss of services or death. Except as provided in this article and article 2, as the case may be, of this chapter, no employer included within the terms of this chapter and no officer, director, agent, servant or employee of such employer shall be held civilly liable for any personal injury to or death of any workman who is an employee of the same employer and whose injury or death is due to an accident while engaged in the service or business of the employer, the cause of which accident originates in the employment...."

The trial court held as a matter of law that Terry was an employee of Read Steel within the meaning of the Workmen's Compensation Act and that Terry's claim against Read Steel was barred by § 25-5-53. Section 25-5-1(6) defines "employee" as "every person ... in the service of another under any contract of hire, express or implied ...." Courts in this jurisdiction have applied the "reserved right of control" test in determining whether the employer-employee relationship exists. See, e.g., Dennis v. Huff, 406 So.2d 412 (Ala.Civ.App.1981). We do not find this test dispositive in cases such as the one here, where a general employer such as Manpower merely provides laborers to special employers such as Read Steel and performs clerical payroll tasks.

Courts in other jurisdictions have addressed the problem more squarely than this Court. In Wright v. Habco, Inc., 419 S.W.2d 34 (Mo.1967), the court affirmed summary judgment for the defendant special employer, observing:

"Plaintiff contends that the trial court erred in entering a summary judgment. He says that there was an issue of fact as to whether defendant had exclusive control over the work performed by plaintiff and as to whether there was an express or implied contract between plaintiff and defendant to engage in the work. It is true, as plaintiff contends, that the agreement between Manpower and defendant contained certain restrictions. Defendant was expected to use Manpower employees in the type of work for which they were requested. This was because a different charge was made for other work classifications. Such employees were not to operate machinery or automotive equipment without the consent of Manpower. That is understandable because such work involved questions concerning insurance, chauffeur's licenses, etc. There were restrictions on the handling of cash by such employees, the reason for which is obvious. The customers also agreed not to employ Manpower workmen for 90 days following the completion of the work done for the customer. That provision was undoubtedly necessary in order to keep customers from obtaining Manpower's better workmen by hiring them directly as regular permanent employees.

"The foregoing restrictions would have no effect upon the right of defendant to control the work in which plaintiff was engaged. He was sent to defendant's building to work as a laborer. The only direction given him by Manpower was to report to defendant for work. Defendant's foreman was his "boss" in doing that work. The evidence makes it clear that plaintiff consented to work for defendant and actually performed the work under the sole direction of defendant's foreman. We are unable to find any factual issue which should have been presented to a jury."

Id., at 37.

Terry's only argument is that Manpower reserved the right of control by requiring Read Steel to obtain prior written permission from Manpower before authorizing Terry to operate machinery or motor vehicles, as set out in the Manpower work ticket filled out by Read Steel:

"[Read Steel, as customer, hereby] ... (2) confirms prior agreement between Manpower and customer, with respect to the services performed hereunder and any future services, that (a) customer shall not ... authorize such employees to operate machinery or motor vehicles without prior written permission from Manpower in each incidence ...."

This argument is answered by the reasoning of the court in Wright, supra. The following quotation from the work ticket drives home the point made in Wright:

"(b) Manpower's insurance does not cover loss or damage caused by Manpower employees operating customer's owned or leased motor vehicle(s), and customer therefore accepts full responsibility for claims ... arising out of or involving violation by customer of paragraph 2(a) above ...."

Thus, Manpower did not reserve control over Terry's work, but merely informed Read Steel that written permission to operate machinery or vehicles was necessary for liability insurance coverage.

Terry introduced an affidavit of Paul J. McMahon, branch manager of Manpower, in opposition to Read Steel's motion for summary judgment. McMahon stated that "Manpower exercises ultimate control over its employees. In the case of Manpower employees (temporary workers) at the Read premises, Read requested and did receive permission from Manpower for the Manpower employees to operate machinery at Read." Similarly argumentative and conclusory statements of "control" were rejected in view of the facts in St. Claire v. Minnesota Harbor Service, Inc., 211 F.Supp. 521 (D.Minn.1962).

The court in St. Claire, supra, concluded a thorough disposition of a claim such as Terry's with the following:

"This brings up the final and most damning fact. What do the defendant and others who use the services of Manpower get when they buy the commodity that Manpower is selling? In this case the plaintiff received a wage of $1.05 per hour but defendant had to pay $1.71 per hour to get the plaintiff from Manpower. What did the defendant pay that $0.66 differential for? ... There is more than a vague connection between the extra $0.66 per hour paid by defendant and the Workman's Compensation which this unfortunate plaintiff received. Part of that $0.66 per hour will pay someone's premium, and in the eyes of the law it must be deemed to have paid the premium for this plaintiff. In other words, the plaintiff is suing in tort the man who paid for his Workman's Compensation. The defendant paid part of this extra $0.66 per hour for the sole and express purpose of assuring that employees which Manpower sent over for temporary employment would be covered by Workman's Compensation. The defendant paid part of this extra $0.66 per hour for the sole and express purpose of not having to defend actions such as the one which has been brought here. This case strikes at the heart of the Workman's Compensation law; this case is in unequivocal opposition to the well-known principles on which...