Wis. Bridge & Iron Co. v. Ramsay

• Decision Date: 13 February 1940
• Parties: WISCONSIN BRIDGE & IRON CO. v. RAMSAY. SAME v. LIPSCOMB. SAME v. GEHRT.
• Court: Wisconsin Supreme Court

233 Wis. 467

290 N.W. 199

WISCONSIN BRIDGE & IRON CO.

v.RAMSAY.

SAME

v.LIPSCOMB.

SAME

v.GEHRT.^*

Supreme Court of Wisconsin.

Feb. 13, 1940.

Dissenting Opinion Feb. 13, 1940.

Appeals from judgments of the Circuit Court for Dane County; Alvin C. Reis, Judge.

Reversed.

Actions by Wisconsin Bridge & Iron Company against the Industrial Commission of Wisconsin and three others, claimants for unemployment compensation under Ch. 108, Wisconsin Statutes, to set aside an order of the Commission awarding such compensation. From judgments confirming the awards, the plaintiff appeals. The facts that control liability are the same in each case, and are stated in the opinion.

ROSENBERRY, C. J., dissenting.

Wright & Mayer, of Milwaukee, for appellant.

Stanley Rector and Arthur Barber, both of Madison, for respondents.

Roberts, Roe & Boardman, of Madison, amici curiae.

FOWLER, Justice.

Three cases are involved wherein, under the Wisconsin Unemployment Compensation Act, unemployment compensation is claimed from the unemployment fund of the Wisconsin Bridge & Iron Company by workers on certain separate construction jobs contracted by the Bridge Company to be furnished and constructed for the Consolidated Paper Company at Wisconsin Rapids. The Bridge Company (hereinafter referred to as the “Company”) contends that it is not the employer of the claimants and is therefore not liable under the Act. Action was brought in the Circuit Court of Dane county by the Company to review the award of the Industrial Commission which held the Company liable. The Circuit Court affirmed the decision of the Commission. The Company appeals.

Under the Unemployment Compensation Act employers are required to contribute 2% of their payrolls (sec. 108.18 (5), Stats.) into a fund paid to and administered by the Industrial Commission. Sec. 108.14, Stats. Claims for benefits when allowed are paid by the State out of the fund accumulated in the employer's account, sec. 108.03. When a claim is made, a deputy designated by the Commission first determines whether the claim is valid and its amount if valid. Sec. 108.09 (2). From this determination an appeal lies to such appeal tribunal as the Commission designates, or to the Commission itself. Sec. 108.09 (3). The appeal tribunal consists of an examiner, or a commissioner; or it may consist of one of these, who is chairman, and of two other members appointed by the Commission, an employer representative and an employee representative. Sec. 108.09 (4). The determination of the appeal tribunal is reviewed on demand by the Commission. Sec. 108.09 (6) (b). Action may be brought as in Industrial Commission Compensation cases to review the determination of the Commission. Sec. 108.09 (7). The instant case went the course of determination by a deputy, determination by an appeal board consisting of an examiner, a representative of the employer and a representative of the employee, review of their determination by the Commission and action to review the Commission's determination.

The claimants were employed in erecting materials and parts fabricated by the Company into certain structures that the Company had contracted to construct and install for the Paper Company. Their work was done under the immediate supervision of one drews for the greater part of the construction work, and later under the immediate supervision of one Michaelis, both of whom had previously been in the employ of the Company as superintendents of construction work done directly by the Company. It is claimed by the respondents that the Company was itself doing the construction work upon which the claimants were engaged, and that both Drews and Michaelis were in the employment of the Company in the instant jobs acting as superintendents or foremen of and for the Company. It is contended by the Company that Drews was an independent contractor to whom the Company had let the construction work involved and that Michaelis, after Drews left the job, was acting not for the Company but for Drews as the latter's superintendent or foreman. There is no question that the claimants are within Ch. 108, Stats., either as employees of the Company or of Drews.

It is undisputed that the Company in form let the work of construction to Drews, and that the form of the contract with him in all respects conformed to the contract regularly and customarily used by the Company in subletting construction work. It is also without dispute that Drews hired the claimants and all other workmen on the construction jobs; that the claimants were paid by checks drawn by Drews; that Drews listed himself with the Industrial Commission as an employer under the Act and set up and paid to the Commission the reserves required from employers by the Act; that Drews as such employer procured compensation insurance for the protection of his employees and paid the premiums therefor; and that the claimants had no contact whatsoever with the Company and no contract of service or hire except their contract with Drews. Drews was paid nothing by the Company for his connection with the job except the contract price fixed by his contracts with the Company and the Company exercised no control whatever over the workmen on the construction jobs, and no control over Drews except such as was indirectly involved in seeing that he properly fulfilled his contract for construction and completed the work according to the specifications of the contracts, to which kind of control an independent contractor is always subject. None of the work covered by Drews' contracts was performed on premises of the Company.

Drews had prior to entering into the contract for construction been regularly in the employment of the Company. After letting to him the instant contract, the Company let to him four other contracts for construction of works elsewhere. When the work on the instant job had progressed so that Drews' presence on the job was not required, a superintendent who had been an employee of the Company was put in charge. This superintendent was not paid by the Company, and must therefore have been paid by Drews. Drews then entered the employment of the Company engaged in work having no connection with the instant contract or his other construction contracts above mentioned. Drews had no been in business as a contractor prior to entering into the instant construction contract, and had theretofore generally been in the employ of the Company, but had been at times employed by others also.

Before the contract with Drews for the instant construction was made the Company was about to proceed with the work of construction itself and applied to the business agent of the Iron Workers' Union of Milwaukee to furnish men for the construction job. The agent refused to furnish men to the Company because the Company had refused to enter into a closed shop agreement, but told the Company's representative that he would furnish men to Drews if Drews took the job under an “under cover” arrangement. The agent made the suggestion for such an arrangement. Following this suggestion the subcontracts were let to Drews and the agent of the union sent the claimants and other workmen to Drews who hired them, and paid them with his own checks.

[1]The findings of the Commission, after reciting as fact that Drews and the supervisor who replaced him on the work at Wisconsin Rapids were both supervisors of the Company, both competent so that no supervision of them was required by the Company, and that the Company furnished all the equipment, tools and machinery used on the jobs, go on to say that various “labor purchase orders” were issued by the Company. These so-called labor purchase orders were by their terms actually contracts by which the Company agreed to pay Drews a stated sum for doing the construction work involved in the several jobs and furnishing the labor and supervision required therefor. The form used was the same as was customarily used by the Company in other construction contracts let to subcontractors. Their nature and effect cannot be camouflaged by designating them as labor purchase contracts or anything else. They were contracts for construction at a stated price no matter what they be called. It is true that the purpose of letting the contracts to Drews was to overcome the compunctions of the union's agent about furnishing union labor to perform a contract of a company who would not enter into a closed shop agreement with the American Federation of Labor and thus procure union labor for performing the work of construction, but the reason back of the letting does not affect the validity of the contracts with Drews. That proposition is sufficiently covered by York v. Industrial Comm., 223 Wis. 1240, 269 N.W. 726. The conclusion of the York case on that point more clearly follows here than there, because in that case the contract involved was entered into to avoid the application of the Workmen's Compensation act. The purpose of the instant contract was not to avoid application of the Unemployment Compensation Act. It was merely as above stated. There was nothing wrong, there was no deception in that. The course taken was taken at the suggestion of the agent of the Union for the purpose of putting to work the claimants and other members of the union furnished by him. The agent did not suggest the plan for the purpose of aiding the Company. He suggested it with view of aiding the workers he furnished. That it also indirectly aided the Company in the performance of its contract with the Paper Company was merely an incidental result of the plan. The purpose might as well been achieved by letting the contracts to a corporate subcontractor or an individual subcontractor who had never had any connection with the Company.

It is said in the findings of the Commission that the amount paid Drews was in excess of the aggregate of the work contracts. The facts in this regard are undisputed. Drews called for money as he wanted it,...