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Posey v. Industrial Commission

Supreme Court of Arizona

March 16, 1960

Charles W. POSEY, Petitioner,
INDUSTRIAL COMMISSION of Arizona and Jack Cummard, H. R. Larson and A. R. Kleindienst, as members of said Commission, and Merritt-Chapman & Scott Corporation, Respondents.

[87 Ariz. 246] Minne & Sorenson and Ben C. Pearson, Phoenix, for petitioner.

John R. Franks, Phoenix, for respondent Industrial Commission of Arizona.

Shimmel, Hill & Kleindienst, Phoenix, for respondent Merritt-Chapman & Scott Corporation.


Petitioner seeks by certiorari to review an award of The Industrial Commission of Arizona (hereinafter called the 'Commission') which denied his claim for workmen's compensation on the ground that petitioner 'was not under a contract of hire, either express or implied * * * at the time of his injury by accident on October 18, 1957' and, further, that petitioner 'did not sustain injury by accident arising out of and in the course of his employment * * *.'

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At the date of the accident petitioner was a member of Construction, Production and Maintenance Laborers' Local Union No. 383 (hereinafter called the 'Union'), which was one of the parties, together with other unions and various contractors, including Merritt-Chapman & Scott Corporation (hereinafter called 'Merritt-Chapman'), to the Arizona Master Labor Agreement and Wage Scales (hereinafter called the 'Master Agreement'). On October 17, 1957, the personnel director of Merritt-Chapman telephoned the dispatcher of the Union at Phoenix to place an order for a member of the Union to fill the job classification of watchman for Merritt-Chapman at the Glen Canyon Damsite. That same day the Union dispatcher filled [87 Ariz. 247] out and gave to petitioner a slip entitled 'Work Clearance,' which, under the heading of the Union, named Merritt-Chapman and its personnel director, set forth the classification of work as watchman, specified the wage per hour, and contained the clause: 'In response to your request we are referring Mr. Chas. Posey.' The Union dispatcher testified that reference to 'a half day's travel time plus transportation expense of $5' was noted in writing on the reverse side of the work clearance slip. The next day petitioner left Phoneix by automobile to drive to the Glen Canyon Damsite, but before reaching his destination he became involved in an accident as a result of which he sustained the injuries for which he is claiming compensation.

The initial question presented is whether the finding of the Commission that petitioner at the time of the accident was not under a contract of hire with Merritt-Chapman is supported by competent evidence. All parties, in effect, concede the materiality of that finding and agree that petitioner is not entitled to compensation unless a contract of employment between petitioner and Merritt-Chapman was in existence on October 18, 1957.

Petitioner claims that the request made by Merritt-Chapman to the Union for a watchman constituted an offer on the terms and conditions set forth in the Master Agreement and that petitioner duly accepted that offer when he received the work clearance slip and proceeded directly to the jobsite. Merritt-Chapman's denial of these conclusions makes it clear that the disagreement between the parties is not over the applicable rules of law but over the proper inferences to be drawn from the evidence.

Neither party disputes that the events which led to petitioner's ill-fated trip to the Merritt-Chapman jobsite conformed to the procedure contemplated in the Master Agreement and customarily followed by the parties. The stated purposes of the Master Agreement are to assure the contractors, such as Merritt-Chapman, who 'are engaged in contract construction work in Arizona' and who 'employ large numbers of members of the various Unions,' including the Union here involved, 'of their ability to procure employees * * * in sufficient numbers and skill to assure continuity of work in the completion of their construction contracts' and 'to establish uniform rates of pay, hours of employment and working conditions which shall be applicable to all employees performing any work for the contractors * * *.'

Paragraph B of Article II of the Master Agreement provides:

'The Unions agree to furnish such employees as may be requisitioned by the Contractors within forty-eight (48) hours; but in the event the Unions are unable to furnish such requisitioned employees within forty-eight (48) [87 Ariz. 248] hours, the Contractor may secure such employees from any other sources available. The Contractor shall notify the Union immediately when such employees are hired.'

The above paragraph presupposes at least three distinct steps in the employment of union members: requisition by the contractor, furnishing by the union, and hiring by the contractor. The reasonable purport of this paragraph is that a contract of employment results not from the first two steps alone, but from a separate act of hiring in addition. The distinction between

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the referral of members by the union and the hiring of them by the contractor is clear also from paragraph B of Article XI, which provides:

'Unions may furnish forms when referring employees for hiring, such forms providing space for the Contractors to complete by checking reason for termination of the employees bearing the form.'

None of the other provisions of the Master Agreement offers any guide on the issue of the time of commencement of employment. It is significant, however, that although the Agreement in paragraph A of Article XI, which is headed 'Unjust Discharge,' permits the contractor to 'discharge any employee for any cause which he may deem sufficient,' with limited exceptions, there is no provision which in any way restricts the contractor from refusing to hire a particular member referred by the union.

There is some dispute over the significance of paragraph 23(b), Section 1, of Appendix A to the Master Agreement, which provides that 'transportation and travel allowance in each instance is to be paid for initial travel to a job with the employee's first pay check.' It is clear, as noted on the reverse side of the work clearance slip, that petitioner would have been entitled to a transportation and travel allowance for his initial travel if he had arrived at the jobsite and performed work. Petitioner urges that the above-quoted paragraph implies that he was an employee of Merritt-Chapman's during the course of such travel. Merritt-Chapman argues that its liability for travel allowance does not accrue until the hiring takes place at the jobsite. At the hearing the personnel director of Merritt-Chapman testified that although his company would not pay such travel allowance to member who was referred by the Union but was refused employment by Merritt-Chapman, it would make payment under protest to the Union.

We need not here decide whether Merritt-Chapman is obligated under the Master Agreement to pay a travel allowance to petitioner. The imposition of such liability does not necessarily imply that petitioner was an employee of Merritt-Chapman during the period of travel. If the referred [87 Ariz. 249] union member and the contractor are not contractually committed to an employment until a contract of hire is entered into at the jobsite, the obligation of the contractor under the Master Agreement to compensate the union member for his transportation expenses does not by itself accelerate the time of commencement of employment or create a contract of hire where one is otherwise not intended by the parties.

The significant point is that the Master Agreement is a contract between the union and the contractor and does not even purport to be a contract of employment between the contractor and the individual union member. It establishes standards of wages and working conditions which apply to persons who are employed by the contractor but it does not originate the employment. In so far as the Master Agreement does deal with the time of commencement of employment, it recognizes that the act of hiring by the contractor is a distinct act which takes place at a time subsequent to the union's referral of one of its members.

The evidence in the record, other than that which relates to the Master Agreement, does not require a reversal of the Commission's finding that no contract of hire was entered into between petitioner and Merritt-Chapman. Petitioner testified that he had intended, prior to the accident, to work for Merritt-Chapman; Merritt-Chapman's personnel director, on the other hand, testified that petitioner was never placed on the company's payroll and, in effect, that if petitioner had arrived at the jobsite, he would have been interviewed in accordance with the regular procedure to determine whether he was a fit and suitable person for the position. None of this testimony was impeached or contradicted.

The Union dispatcher did testify, however, that he and not an official of Meritt-Chapman selected petitioner as the person to be referred to the company for the position

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of watchman; that on past occasions union members referred to a contractor under the Master Agreement sometimes failed to arrive at the jobsite or refused to work, particularly at the Glen Canyon Damsite, because they disliked the living facilities or for some other reason; that union members who are referred to the Glen Canyon Damsite are generally interviewed by a company official and are sometimes found to be unacceptable; and that the referred union member goes on the payroll of the contractor when he reports at the jobsite and turns in his work clearance slip, assuming that he and the employer want him to go to work. [1]

[87 Ariz. 250] This testimony of the Union dispatcher certainly warrants the conclusion that under the requisition procedure adopted by the Union and Merritt-Chapman, neither the referred Union member nor the company considers himself or itself bound to an employment until some time after the member arrives at the jobsite. Under these circumstances, no contract of employment can result prior to the Union member's arrival at the jobsite. Petitioner's intention to work for Merritt-Chapman is not inconsistent with an understanding on his part that neither he nor the company is committed to an employment during the time of initial travel.

A holding that a contract of hire is entered into prior to the time the referred union member arrives at the jobsite has at least three legal consequences which clearly appear not intended by any of the parties: (1) the interview customarily conducted by the employer at the jobsite would have no legal efficacy; (2) the failure or refusal of the union member to commence work would constitute a breach of the contract of hire; and (3) the refusal of the employer to hire the union member might violate the provisions of the Master Agreement relating to unjust discharge. Further, a holding that there is a contract of hire which either party can revoke at will at any time prior to the parties' agreeing to an employment at the jobsite finds no support in the evidence and, indeed, results in characterizing as a contract that which [87 Ariz. 251] grants no legal rights to either party and imposes no correlative duties on the other.

We recognize that there are situations in which a contractor or other employer

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may expressly or, through custom or usage, impliedly delegate to a union official the responsibility and authority for selecting and hiring a person required by the employer to fill a work classification covered by a collective bargaining agreement, and that the oral acceptance of that classification by the person selected by the union official will result in a contract of employment. See Bowers v. American Bridge Co., 43 N.J.Super. 48, 127 A.2d 580, affirmed on opinion below, 24 N.J. 390, 132 A.2d 28 and Gomez v. Federal Stevedoring Co., 5 N.J.Super. 100, 68 A.2d 482, principally relied on by petitioner, where an intermediate appellate court in each case dealt with the conflicts of law problem of which one of two states was the situs of contract of employment and did not--because it was there conceded that the contract of employment had been entered into prior to the time claimant sustained the injuries which, also concededly, arose out of and in the course of that employment--determine the point here in issue. In those situations the result depends upon a finding that the employer, at the time he made his requirement known to the union official, committed himself to employ the person selected by the union official, and that the person so selected likewise committed himself to such employment. Where, however, as here, there are no such commitments by the employer and the prospective employee, it is held that there is no contract of employment, even for the purposes of a workmen's compensation or analogous statute. See Miller v. T. H. Browning S.S. Co., D.C., 73 F.Supp. 185, affirmed 2 Cir., 165 F.2d 209, certiorari denied 334 U.S. 834, 68 S.Ct. 1341, 92 L.Ed. 1761; Hunt v. Jeffries, 236 Mo.App. 476, 156 S.W.2d 23; Brewer v. Department of Labor & Industries, 143 Wash. 49, 254 P. 831; California Highway Commission v. Industrial Accident Commission, 40 Cal.App. 465, 181 P. 112.

We hold that there is competent evidence in the record to support the finding of the Commission that at the time petitioner sustained his injuries he was not under a contract of hire, either express or implied, with Merritt-Chapman and that he is, accordingly, not entitled to workmen's compensation. This holding makes it unnecessary for us to consider the other assignments of error.

The award is affirmed.

PHELPS and UDALL, JJ., concurring.

STRUCKMEYER, Justice (concurring).

The solution to the problem raised by the appeal lies in the application of simple, fundamental principles of law. The employer here, by written agreement, made the Union its agent to furnish potential [87 Ariz. 252] workmen. The sentence, 'The Contractor shall notify the Union immediately when such employees are hired' (Paragraph B, Article II, Master Agreement), clearly imports that workmen furnished by the Union are not employees until accepted at the job site. The same conclusion is forced by paragraph B, Article IX, Master Agreement, providing that 'Unions may furnish forms when referring employees for hiring * * *.' (Emphasis supplied.) Posey simply was not hired as an employee until accepted at the job site.

The further question then is: what effect must be given the arrangement ('Special Working Rules', Appendix A, Master Agreement) for travel allowance and transportation to be paid to the potential employee for going from Phoenix, Arizona, to the job site in order to present himself for hiring? The answer to the question is plain and wholly dispositive of the case. The offer of Merritt-Chapman & Scott to compensate workmen for travel to the job site is not in itself a contract and cannot be raised to the dignity of a unilateral contract until acceptance by substantial performance. 1, Corbin on Contracts, 144, § 49. Posey never reached the job site nor presented himself for hiring, and hence, in my opinion, under no possible consideration of the law and the facts could it be found that Merritt-Chapman & Scott was contractually obligated to him.

However, if it be assumed that performance by Posey was substantial and therefore sufficient to create a firm obligation to

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pay him travel allowance and transportation, there is still to be faced the insurmountable hurdle that the contract is not one for employment--that is, one which creates the status of master and servant.

'Contracts for the rendition of services ordinarily result in one of three general classifications--such contracts may create a partnership, that of an independent contractor, or that of master and servant * * *. By considering the elements of these three general classifications, we eliminate those that do not fit the facts and thus determine the correct relationship created by the contracts.' United States v. Wholesale Oil Co., 10 Cir., 154 F.2d 745, 747.

A.R.S. §§ 23-902, subd. C of the Workmen's Compensation Act provides:

'A person engaged in work for another, and who while so engaged is independent of the employer in the execution of the work and not subject to the rule or control of the person for whom the work is done, but is engaged only in the performance of a definite job or piece of work, and is subordinate to the employer only in effecting a result in accordance with the employer's design, is an independent contractor * * *.'

[87 Ariz. 253] This section has been construed numerous times. The test has been held to be whether the alleged employer retains control over the method of reaching the required result or whether his control is limited to the result reached, leaving the method to the other party. Barker v. General Petroleum Corp.,72 Ariz. 187, 232 P.2d 390, modified 72 Ariz. 238, 233 P.2d 449; Industrial Commission v. ...

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