Trappey v. Lumbermens Mut. Cas. Co.

• Decision Date: 10 December 1954
• Docket Number: No. 3921,3921
• Citation: 77 So.2d 183
• Parties: Ellis TRAPPEY v. LUMBERMENS MUTUAL CASUALTY CO.
• Court: Court of Appeal of Louisiana — District of US

Page 183

77 So.2d 183

Ellis TRAPPEY v. LUMBERMENS MUTUAL CASUALTY CO.

No. 3921.

Court of Appeal of Louisiana, First Circuit.

Dec. 10, 1954.

Rehearing Denied Jan. 28, 1955.

Writ of Certiorari Granted Feb. 14, 1955.

McBride & Brewster, Lafayette, for appellant.

Davidson, Meaux, Onebane & Nehrbass, Lafayette, for appellee.

ELLIS, Judge.

This is a suit for compensation by Ellis Trappey against the Lumbermens Mutual Casualty Company who was the insurer of the Trappey Beverage Company of New Iberia, and Lafayette, Louisiana, for $30 per week for 400 weeks with 5% per annum interest from maturity until paid, and for an additional sum not to exceed $500 for medical and incidental expenses which may have or be incurred, plus 12% for the arbitrary and capricious refusal of the defendant insurance company to continue Trappey's compensation after 15 weekly payments, and reasonable attorney fees not to exceed 20% of any amount recovered, with an allowance of all credits for compensation and medical payments previously paid and for all costs of this proceeding.

The defendant filed exception of no right or cause of action which was sustained by the district court under the authority of Dezendorf v. National Casualty Co., La.App., 171 So. 160, and Harper v. Ragus, La.App., 62 So.2d 167, in which our brethren of the Second Circuit held that a member of a partnership could not sue for compensation for he could not be both employer and employee at the same time.

The exception of no right or cause of action was considered by the District Court on the allegations of the petition and a stipulation of fact entered into at the time of the argument.

The admitted facts as shown by the stipulation and the allegations of the petition and upon which the District Court based its judgment and upon which this Court must do likewise were that Ellis Trappey, plaintiff herein, had been employed by the Trappey Beverage Company of New Iberia and Lafayette, Louisiana, which was a commercial partnership composed of H. W. Trappey, Bernard Trappey, A. F. Trappey, R. J. Trappey and George Trappey, Jr., as manager and supervisor of its bottling plant in Lafayette, and some time prior to the accident, injury and resulting disability to his eye on September 20, 1952, the Trappey Beverage Company gave him a 1/6th interest in the partnership.

Prior to the time that plaintiff entered the partnership the defendant company issued the policy of insurance which, of course, covered him as an employee of the partnership. After the injury compensation was paid by the defendant until it learned that the plaintiff was a member of the partnership which was on or about January 5, 1953.

In the Dezendorf case, supra, the court based its decision upon the New York case of Le Clear v. Smith, 207 App.Div. 71, 202 N.Y.S. 514, 516, and the old English case decided in 1905 of Ellis v. Ellis & Co., 7 W.C.C. 97, 92 L.T. 718. In dealing with the Le Clear case the Court quoted the following:

"It seems to me that the real question presented is: Was the claimant at the time of his injury an employee? There is little room for doubt but that in certain aspects a copartnership is a legal entity, and it may be regarded as such particularly here, where the effort of the Workmen's Compensation Law is to cast upon the business of the employer the burden of compensation for injuries growing out of such business. But, though an entity, it had not as such the capacity as an artifice to hire, discharge, and direct its employees. That power rested in the copartners, or in some person authorized by them. As pointed out in Bowne v. S. W. Bowne Co., 221 N.Y. 28, 116 N.E. 364, the claimant should not be considered an employee because he was the corporation. So here we are led to hold that LeClear cannot be regarded as an employee, because he was a member of the partnership.

"The relationship of LeClear to the firm of Smith & LeClear, upon his admission to the partnership, it seems to me, became that of an employer. The salary of $15 a week which he drew, in addition to one-third of the net profits, was not for the performance of any special work; it was pay for the general work of the copartnership. That LeClear's character was that of an employer seems to be quite well established in the law, and there is no case to which I have been referred holding a contrary doctrine. Cooper v. Industrial Accident Comm. of California, 177 Cal. 685, 171 P. 684; Nevills v. Moore Mining Co., 135 Cal. 561, 67 P. 1054; Ellis v. Joseph Ellis & Co., 7 W.C.C. 97; Employers' Liability Assurance Corp. v. Industrial Accident Common., 187 Cal. 615, 203 P. 95; Millers' Indemnity Underwriters v. Patten (Tex.Civ.App.) 238 S.W. 240; Bank of Buffalo v. Thompson, 121 N.Y. (280) 283, 24 N.E. 473; Hartigan v. Casualty Co. of America, 227 N.Y. (175) 179, 124 N.E. 789; Skouitchi v. Chic Cloak & Suit Co., 230 N.Y. 296, 130 N.E. 299, 15 A.L.R. 1285."

In referring to the Ellis case, supra, it made the following observation:

'It is unanswerably argued, I think, in the English case of Ellis v. Ellis & Co., above cited, that an employee cannot be both employee and employer, that the payment of wages is but the adjustment of accounts between partners and the right of compensation depends upon the relationship between the employer and the person whom he employs. If the claimant became by his entrance into the copartnership an employer he ceased to be an employee. The law in its definitions does not recognize such dual relationship in industrial enterprise. There are only employers and employees, no hermaphrodites. Workmen's Compensation Law 1914, § 3, subds. 3, 4, as amended by Laws 1917, c. 705."

Further quoting from the Dezendorf case, supra:

'And in Munter v. Ideal Peerless Laundry, 229 App.Div. 56, 241 N.Y.S 411, 414, the Supreme Court of New York said:

"It is plain that the Munter brothers were a copartnership or an association and were conducting as such the business of the Ideal Peerless Laundry on March 22.

"In the Compensation Law there is no such personality to be found as to constitute at once employer and employee. Lyle v. H. R. Lyle Cider & Vinegar Co., 243 N.Y. 257, 153 N.E. 67, 47 A.L.R. 840; Duprea v. Duprea Brothers, 224 App.Div. 673, 229 N.Y.S. 852; Le Clear v. Smith, 207 App.Div. 71, 202 N.Y.S. 514."

In the Dezendorf case it was held that the plaintiff who was a member of the partnership could not legally become an employee and was not entitled to recover compensation from either the partnership or its insurer. The Ragus case, supra, followed this case and that appears to be the only two Louisiana cases dealing with the subject. Neither was considered by the Supreme Court nor was a rehearing applied for in either.

The weight of authorities in the United States is in accord with the Le Clear and Ellis cases, however, Oklahoma is one State which represents the minority view. In the case of Ohio Drilling Company v. State Industrial Commission, 86 Okl. 139, 207 P. 314, 317, 25 A.L.R. 367, the Court stated:

'We think that the construction of the Workmens' Compensation Act [85 O.S.1951 § 1 et seq.] that a member of the partnership, who works for the partnership, and while so engaged is injured, is not an employee within the meaning of the act, is an exceedingly narrow construction of the act.'

This case was cited with approval by a minority of three in a dissenting opinion in a recent Arkansas case of Brinkley Heavy Hauling Co. v. Youngman, 264 S.W.2d 409. The Ohio Drilling Company case, supra, is still the rule in Oklahoma. See Rodgers v. Blair, 201 Okl. 249, 204 P.2d 867.

It would appear that the present rule in Louisiana established in the Dezendorf case, supra, was based upon the doctrine of the common law State which apparently has treated partnerships as aggregations of individuals, which Louisiana under its civil law has treated partnerships as separate entities.

There can be no question with regard to Louisiana's position in its treatment of partnerships. Our Civil Code, Article 2801, stated:

'Partnership is a synallagmatic and commutative contract made between two or more persons for the mutual participation in the profits which may accrue from property, credit, skill or industry, furnished in determined proportions by the parties.' LSA-C.C. art. 2801.

Under this Article are cited many cases one of which is Fourth Nat. Bank v. New Orleans & C. R. Co., 1870, 11 Wall. 624, 78 U.S. 624, 20 L.Ed. 82:

'A party coming into the right of a partner comes into nothing more than an interest in the partnership, which cannot be tangible, made available, or be delivered, but under an account between the partnership and the partner.'

Again in the case of Brinson v. Monroe Automobile & Supply Co., 1935, 180 La. 1064, 158 So. 558, 96 A.L.R. 1206, it was held:

"Partnership' is a civil person, distinct from persons who compose it, having peculiar rights and attributes, and partnership's personalty does not belong to partners, but to ideal being, which has control thereof, and partners own only residuum.'

In discussing the nature of a partnership the court in Smith v. McMichen, 1848, 3 La.Ann. 319, after quoting C.C.1825, Art. 2772, now this Article, said 'This definition, for the purpose of our present inquiry, is substantially the same as that found in the Code Napoleon, and that given by Pothier. It accords with the civil law as presented by Domat, who defines partnership to be a covenant by which two or more persons unite in carrying on some commerce, some work, or some other business, that they may share among them all the profit or loss which they may have by the joint stock which they have put into the partnership. He cites the principle of the Roman law--'Sicuti lucrum, ita damnum quoque conmune esse oportet.' And if we look to the common law writers, we find in the general theory a substantial harmony with our own, with the French, and with the Civil law. It is a contract, says Chancellor Kent, of...