Young v. Environmental Air Products, Inc.

• Decision Date: 17 June 1982
• Docket Number: No. 2,CA-CIV,2
• Citation: 665 P.2d 88,136 Ariz. 206
• Parties: David T. YOUNG, a single man; and Michael W. Mason, a single man, Plaintiffs/Appellees/Cross Appellants, and Kirby Building Systems, Inc., a Texas corporation, Defendant/Appellee, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation, Defendant/Appellant/Cross Appellee. David T. YOUNG, a single man; and Michael W. Mason, a single man, Plaintiffs/Appellants, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation; Kirby Building Systems, Inc., a Texas corporation; William Foster and Betty Foster, husband and wife; Frank Coates and Gloria Coates, husband and wife; and Tonnes Skagestad and Esther Skagestad, husband and wife, Defendants/Appellees. KIRBY BUILDING SYSTEMS, INC., a Texas corporation, Defendant/Cross Appellant, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation, Defendant/Cross Appellee. William S. FOSTER and Betty Foster, husband and wife, Cross Plaintiffs/Appellants, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation, Cross Defendant/Appellee. 4023.
• Court: Arizona Court of Appeals

Page 88

665 P.2d 88

136 Ariz. 206

David T. YOUNG, a single man; and Michael W. Mason, a single man, Plaintiffs/Appellees/Cross Appellants and Kirby Building Systems, Inc., a Texas corporation, Defendant/Appellee, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation, Defendant/Appellant/Cross Appellee.

David T. YOUNG, a single man; and Michael W. Mason, a single man, Plaintiffs/Appellants, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation; Kirby Building Systems, Inc., a Texas corporation; William Foster and Betty Foster, husband and wife; Frank Coates and Gloria Coates, husband and wife; and Tonnes Skagestad and Esther Skagestad, husband and wife, Defendants/Appellees.

KIRBY BUILDING SYSTEMS, INC., a Texas corporation, Defendant/Cross Appellant, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation, Defendant/Cross Appellee.

William S. FOSTER and Betty Foster, husband and wife, Cross Plaintiffs/Appellants, v. ENVIRONMENTAL AIR PRODUCTS, INC., an Arizona corporation, Cross Defendant/Appellee.

No. 2 CA-CIV 4023.

Court of Appeals of Arizona Division 2.

June 17, 1982.

Rehearing Denied Sept. 27, 1982.

Review Granted Oct. 19, 1982.

Healy & Beal, P.C. by William T. Healy and Robert L. Beal, Tucson, for Young and Mason

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears by Richard J. Woods and Larry L. Smith, Phoenix, for Kirby Bldg. Systems.

Slutes, Browning, Sakrison & Grant, P.C. by William D. Browning, Tucson, for Environmental Air and Coates.

Walter U. Weber, Tucson, for Foster.

Thomas E. Johnson, Tucson, for Skagestad.

OPINION

HATHAWAY, Judge.

This appeal arises from a jury verdict against the defendant-appellant Environmental Air Products, Inc. (EAP) for personal injuries suffered by two workmen. The plaintiffs-appellees also cross appeal from a judgment n.o.v. and the provisional granting of a new trial in favor of another defendant, Kirby Building Systems, Inc.

The appellant raises the following issues: (1) EAP cannot be liable in tort because the plaintiffs were EAP employees covered by workmen's compensation; (2) evidence of the receipt of workmen's compensation benefits should have been admitted to prove malingering; (3) special interrogatories should have been submitted to the jury and (4) certain instructions should have been given while others should not have. The cross appeal is based on an alleged conflict in the evidence, which, it is argued, renders the judgment n.o.v. for Kirby improper.

Kirby sold EAP a kit for a large, prefabricated metal building. EAP undertook the construction itself, using its maintenance chief, William Foster, as foreman. Foster had experience erecting smaller metal buildings, but had never supervised such a large project. A crew was hired and began work, but the project was stopped by the Registrar of Contractors because EAP was not a registered contractor. Because of this impediment, EAP negotiated a contract with Cimetta Engineering and Construction Company. According to the contract, Cimetta was to supervise the project and pay the workmen's compensation insurance premiums. According to testimony, this contract may have been merely an accomodation to EAP to allow the project to continue. Cimetta was required to accept Foster (who helped to negotiate the contract) as the foreman for the project and may not have been able to fire him without the approval of Frank Coates, EAP's vice president. Nevertheless, Cimetta did exercise some control over Foster and seemed to have the right to fire the other workmen.

Plaintiff Mason had been hired by EAP before Cimetta was engaged. On the day the EAP-Cimetta contract was signed, Mason went off the EAP payroll and onto Cimetta's. Two days later, plaintiff Young was hired. He went directly on the Cimetta payroll.

It is clear from the testimony that the construction was done improperly by failing to brace the first bay (the space between two rafters) either with permanent or temporary bracing. This improper procedure resulted in the collapse of the uncompleted building when a strong wind blew through the construction site. The plaintiffs fell off the building and steel rafters fell on them. They collected compensation benefits through Cimetta and sued EAP in tort. The court directed verdicts in favor of Cimetta and its officer, Tonnes Skagestad, as well as the EAP vice president, Frank Coates. The jury returned a verdict against Foster and EAP as Foster's employer. A jury verdict against Kirby was set aside by a judgment n.o.v. The court also granted Kirby a conditional new trial for error in jury instructions.

EAP's APPEAL

I

At the end of the plaintiffs' case, the trial court ruled that plaintiffs were employees of Cimetta. It determined, however, that the jury should decide who employed Foster. (In answering a special interrogatory, the jury found that Foster was controlled by EAP.)

EAP contends that the court should have found that the plaintiffs were EAP employees. This would have barred the tort suit, as an employee's sole remedy against his employer is workmen's compensation. In the trial court, EAP based its argument on A.R.S. § 23-902(B), which states:

"When an employer procures work to be done for him by a contractor over whose work he retains supervision or control, and such work is a part or process in the trade or business of the employer, then such contractors and the persons employed by him, and his sub-contractor and persons employed by the sub-contractor, are, within the meaning of this section, employees of the original employer."

EAP contended that the building of a new plant is a "part or process" of its business. The plaintiffs did not object to this argument. See Carnes v. Industrial Commission, 73 Ariz. 264, 240 P.2d 536 (1952); S.H. Kress & Co. v. Industrial Commission, 38 Ariz. 330, 299 P. 1034 (1931). A recent case from division one of this court held the building of a sanctuary to be the usual business of a church. See Greenway Baptist Church v. Industrial Commission, 130 Ariz. 482, 636 P.2d 1264 (App.1981).

EAP argues that, as a matter of law, plaintiffs and Foster could not have different employers. We do not agree. It is settled that an employer may not escape liability to persons who are hired by his servant. See Mahan v. Litton, 321 S.W.2d 243 (Ky.1959); Bobick v. Industrial Commission, 146 Ohio St. 187, 64 N.E.2d 829 (1946); Larson v. Independent School Dist. No. 11J of King Hill, 53 Idaho 49, 22 P.2d 299 (1933), which are cited by EAP. The reason for this rule was stated in Grabe v. Industrial Commission, 38 Ariz. 322, 299 P. 1031 (1931), a case in which an employer denied his liability under the workmen's compensation statutes. The court held that the injured worker was Grabe's employee, even though he had been hired by a purported independent contractor, because Grabe retained control over the work done and could have fired any of the workers. According to the court:

"... were this not so [,] the beneficent purposes of the act could and would be easily defeated or evaded by unscrupulous employers through the aid of various dummy intermediaries. The statute therefore brushes aside all forms and subterfuges and provides that one just, simple and definite test. If the work be part of the regular business of the alleged employer, does he retain supervision or control thereof? All other matters are of importance only as they throw light on this question." 38 Ariz. at 328, 299 P. at 1034.

In the instant case, EAP is not trying to deny liability under the workmen's compensation scheme. Rather, it seeks to escape tort liability by proving that it was the plaintiffs' employer. The policy considerations are therefore different than those in Grabe. In Novenson v. Spokane Culvert & Fabricating Co., 91 Wash.2d 550, 588 P.2d 1174 (1979), the court observed that, for workmen's compensation purposes, the right to control is not the only factor in determining the existence of an employer-employee relationship. Additionally, a mutual agreement to establish the relationship must exist between the parties. That agreement may be express or implied. DeVall v. Industrial Commission, 118 Ariz. 591, 578 P.2d 1020 (App.1978).

In Novenson, the court stated:

"When the party asserting the existence of an implied employment relation is not an employee seeking statutory compensation, but an employer seeking a defense to a common law suit, different social values are at stake. In the former situation, if an employment agreement is established, moderate statutory benefits are available to the injured worker; however, reaching such a conclusion in the second situation results in the destruction of valuable common law rights to the injured workman. IB A. Larson, Workmen's Compensation Law §§ 47-42(a), 48.10 (1978)." 588 P.2d at 1177.

The status of "employee" cannot be thrust upon an individual without his consent. There must be an express or implied contract of employment, which requires that both parties agree to the employment. 53 Am.Jur.2d, Master and Servant, § 15. The reasons for the requirement are explained in Larson's discussion of vicarious liability as contrasted to compensation law:

"The end product of a vicarious liability case is not an adjustment of rights between employer and employee on the strength of their mutual arrangement, but a unilateral liability of the master to a stranger. The sole concern of the vicarious liability rule, then, is with the master: Did he accept and control the service that led to the stranger's injury? If he did, it is of no particular importance between him and the stranger whether the servant enjoyed any reciprocal or contractual rights vis-a-vis the master. Accordingly, the Restatement of Agency (Second) says plainly that the master must consent to the service, but nowhere requires that the servant consent to serve the master or even know who he is.

Compensation law, however, is a mutual arrangement between the employer and...