House v. State Industrial Accident Commission , 167 Or. 257 ( 1941 )

Proceeding under the workmen's compensation act by Winona House, claimant, for the death of Marion N. House, her husband, who was employed by the Turner Chevrolet Company. From a judgment of the circuit court granting compensation, the state industrial accident commission appeals.

REVERSED. Marion N. House, while on his way from Tulelake, California, to Portland, Oregon, to attend a zone meeting of Chevrolet dealers and salesmen, was fatally injured near Bend, Oregon, in an accident involving the automobile in which he was ridding as a passenger. He left surviving him his widow, the plaintiff herein, and their minor daughter, aged six years. The widow presented to the Oregon state industrial accident commission a claim for compensation for her husband's death, and upon the commission's denial thereof this action was instituted. From a judgment of the circuit court in favor of the claimant the state industrial accident commission has appealed.

The facts in the case are substantially the following: Turner Chevrolet Company is an Oregon corporation with its principal place of business at Klamath Falls, Oregon. It is there engaged in the sale of new and used motor vehicles, and in connection therewith conducts a garage and repair shop. Sometime prior to the accident above mentioned, Turner Chevrolet Company established a branch business at Tulelake, California, about six miles south of the Oregon boundary. This branch was engaged in practically the same business as that of the home office of the corporation. Compliance had been made by the corporation with the laws of California authorizing foreign corporations to do business in that state. Both the main office and the Tulelake branch had direct franchises from Portland Chevrolet Motor Company for the sale of new Chevrolet motor vehicles in their respective territories.

On or about March 1, 1939, Mr. House, then a resident of California, was employed by Turner Chevrolet Company as a used car salesman at its Klamath Falls place of business, where he worked as such salesman until about July 15, 1939, at which time he was made manager of the Tulelake branch. His contract of employment as branch manager was made at Klamath Falls in the state of Oregon. Upon assuming his duties at Tulelake Mr. House moved there and was a resident of California until the time of his death.

The Tulelake branch was financed and its policies were determined by the directors of the corporation at Klamath Falls. The branch kept its own set of books and its own bank account, and paid its own employes. It made tax returns to the state of California on the business done by it. The employes of the Tulelake branch were listed as California workmen for purposes of the national social security law. Turner Chevrolet Company had elected to come under the Oregon workmen's compensation law, and paid contributions to the state industrial accident commission for its workmen employed at the Klamath Falls place of business. The corporation also complied with the workmen's compensation law of the state of California relative to the employes of the Tulelake branch.

Once a month the Tulelake branch furnished to the home office at Klamath Falls a monthly statement of the business done by it. The income from both the Tulelake branch and the home office was consolidated for the purpose of making federal income tax returns.

Mr. Turner, president and general manager of Turner Chevrolet Company, testified that employes at the Tulelake branch were not in any way connected with the Klamath Falls business. He was asked if he had not given the following testimony before the industrial accident commission:

"Q. Payrolls kept separately or together? A. Two distinct statements, payrolls and everything, entirely separate. Don't know how to put it any stronger, wasn't any connection whatsoever."

His reply was as follows: "That is right. I would not know whether there was a profit or loss unless they were kept separate." Questioned further in this connection, he gave the following testimony in court:

"Q. They were absolutely separate businesses as far as you were concerned? A. Separate businesses as far as you could make a branch separate."

Mr. Turner testified in regard to Mr. House's trip to Portland that Mr. House as manager of the Tulelake branch received a bulletin from Chevrolet Motor Company in Portland requesting him to attend the meeting. As to that trip he further testified thus:

"Q. And you did not tell him to go up there? A. No. Q. He was doing that under this dealer franchise in Tulelake? A. Correct. Q. And received his notice from the zone headquarters for that? A. Correct. Q. And not under your direction and control; is that right? A. That is correct."

Mrs. House testified that Mr. House was on his way to Portland to see the new 1940 Chevrolet. Her further testimony was as follows:

"Q. Do you know whether he saw Mr. Turner before he went up there, up to Portland? A. Yes, he saw him the night before he went up there. Q. Do you know why he saw him? A. Because I asked him not to go."

The meetings which were held in Portland by Chevrolet Motor Company were not for Oregon dealers and salesmen exclusively, but for an entire zone including parts of Washington and northern California.

Relative to the question of whether Mr. House, after becoming manager of the Tulelake branch performed any work in the state of Oregon, the record discloses the following:

"Q. [By Mr. Crowther] Now, Mr. Turner, after Mr. House went down and took his employment, from that time until the time he died, did he ever work for you or for the Turner Chevrolet Company in Oregon under your direction and control?

"Mr. Schaupp: Object to that as wholly immaterial. I don't think it is material at all whether he worked in Oregon. That is the position we take on that proposition. He has stated he was employed and worked in California; that is what we agreed, he was employed and working in California.

"Mr. Crowther: It is also agreed, then, he was not up in Oregon?

"Mr. Schaupp: That is agreed. We will stipulate. We don't claim he worked in Oregon."

A stipulation was entered into by counsel representing the respective litigants, which reads in part as follows: "That on the ninth day of October, 1939, Marion N. House, while acting within the scope of his employment as manager of the Tulelake, California, branch of the Turner Chevrolet Company, was traveling as a passenger in a motor vehicle being operated by one John Selby near the city of Bend, in the state of Oregon, and while so traveling received injuries through violent, accidental and external means which resulted in his death; that said accident arose out of and in the course of the employment of the said Marion N. House as manager of the Tulelake, California, branch of the said Turner Chevrolet Company; . . . That said Marion N. House was not employed to work in the state of Oregon but was in the state incidental to and in pursuance of this employment as manager of the Tulelake, California, branch of the Turner Chevrolet Company."

The salesmen employed both by the main office and the branch, who were not the only workmen employed by either, called on prospective buyers and sold automobiles both in Oregon and California. Probably over one-half of the cars sold by the Tulelake branch were sold to residents of Oregon.

In answer to a question as to whether Mr. House while in Oregon on his way to the Portland meeting did any work in Oregon with any power-driven machinery or in connection with any garage in Oregon, this testimony was given by Mr. Turner:

"A. I am sure I could not tell you. Q. So far as your employment was concerned you do not know? A. I could not tell, I do not know. Two-thirds of his work I know was in Oregon because of the selling."

The only fair inference to be drawn from this last statement of Mr. Turner, in view of his testimony previously quoted and the above quoted stipulation, is that he referred to the work of the salesmen of the Tulelake branch, who were under Mr. House's supervision, and did not mean to imply that Mr. House himself performed any work in Oregon.

The question here presented is whether a workman hired by an Oregon employer subject to the Oregon workmen's compensation law, to work at a place of business established in another state, is protected by that law when and while he is in the state of Oregon temporarily and incident to such employment.

In connection with this question we again refer to the recitals of the stipulation that "said Marion N. House was not employed to work in the state of Oregon but was in the state incidental to and in pursuance of this employment as manager of the Tulelake, California, branch of the Turner Chevrolet Company" and that he was injured while "acting within the scope of his employment as manager of the Tulelake, California, branch of the Turner Chevrolet Company."

On approaching a consideration of this problem it is well to bear in mind that little assistance is available from the decisions of other jurisdictions because of the dissimilarity between the Oregon workmen's compensation law and those of other states. This observation has heretofore been made a number of times by this court in construing our act. Under the Oregon workmen's compensation law, employers and employes contribute to a fund which is administered by the state as a trust account out of which compensation is paid to injured workmen or, in cases of death, to their beneficiaries. The rate of contribution paid by an employer is based on the hazards of his business, and the total amount of contributions paid into the fund is governed by the expenses incurred in administering the workmen's compensation law and the sum of awards made under it.

Only six states other than Oregon provide for an exclusive state fund out of which to pay compensation to injured workmen or their beneficiaries. Those states are Arizona, Nevada, North Dakota, Ohio, Washington and Wyoming. In the following states the employer may elect whether to contribute to the state fund or provide other insurance: Colorado, Idaho, Maryland, Montana, New York, Oklahoma, Pennsylvania, Texas, Utah and West Virginia. In the remaining states compensation is provided by the employer's procuring insurance against liability or showing financial responsibility for self-insurance: 4 Schneider's Workmen's Compensation Statutes, Perm. Ed., page 4434. California, included in this last group, in addition permits employers to obtain protection through payment into a state fund.

The Oregon act does not expressly or impliedly extend to operations of a permanent nature conducted outside this state by an Oregon employer subject to the act. There is no provision requiring such an employer to contribute to the accident fund on account of his employes permanently engaged in work outside Oregon. If a workman is engaged to work in this state and as an incident of his employment is required to leave the state temporarily, he is entitled to compensation if injured outside Oregon while acting in the scope of his employment.

Section 102-1731, O.C.L.A., provides in part as follows:

"If a workman employed to work in this state and subject to this act temporarily leaves the state incidental to such employment and receives an accidental injury arising out of and in the course of his employment, he shall be entitled to the benefits of this act as though he were injured within this state, if at the time of the accident he was not subject to the workmen's compensation law of the jurisdiction in which he was injured."

By this language the legislature has made it clear that a workman injured outside this state must, in order to be entitled to compensation from the state accident fund, have been employed to perform work in this state and must have left the state only temporarily, as an incident of his employment within the state. Mr. House was not employed to perform work within the state of Oregon and had he been injured in California he would not have been entitled to the benefits of the Oregon workmen's compensation act. It is therefore apparent that his permanent employment in California prevented him from being entitled to the benefits of the act, at least while he was so employed outside the state.

The New York court of appeals in Matter of Cameron v. EllisConstruction Co., 252 N.Y. 394, 169 N.E. 622, discusses in some detail the application of the workmen's compensation law of that state to employment performed outside the state. After pointing out that nowhere in the workmen's compensation law is there an explicit definition of its territorial scope, the opinion proceeds as follows:

"Nothing in the statute suggests that the state of New York has attempted to stretch forth its arm to draw within the scope of its own regulations the relations of employer and employe in work conducted beyond its borders. Hazardous employment here is regulated by the workmen's compensation law; hazardous employment elsewhere, though connected with a business conducted here, does not come within its scope. Even where the contract of employment is made within the state, we have said that the state ``does not attempt to regulate the duty of foreign employers in the conduct of their business within foreign jurisdictions.' (Matter of Smith v. Heine Boiler Co., supra.) There we were dealing, as in this case, with a foreign employer. The principle is not, however, limited to foreign employers. The statute imposes upon every employer, foreign or domestic, the duty to secure to his workmen compensation for injuries, wherever sustained, arising out of and in the course of employment located here. Absence of a workman from the state in the course of such employment does not interrupt that duty where the duty has been imposed upon the employer under the statute. It has not been imposed upon the employer in connection with employment located outside the state. The test in all cases is the place where the employment is located. * * *

"* * * Where the workman employed in work here is called upon, in the course of his employment, to perform transitory work outside of this state, the employment as a whole remains an employment here. It is otherwise when the workman is employed to work at a fixed place or places outside the state."

We have called attention to and quoted from § 102-1731,supra, and quoted the above excerpt from the opinion of the New York court of appeals for the purpose of showing that the Oregon workmen's compensation law can not and should not be construed as extending to the work performed by Mr. House while he was in the state of California. Of course, if he had been covered while in California by the Oregon law, he would also have been entitled to its protection while passing through Oregon in connection with his California employment. Before Mr. House would be entitled to the protection of the Oregon law, he must have acquired the status of an employe within this state, which status could not have been attained by him except by rendering service in this state to an employer contributing to the state accident fund.

We are not unaware of the fact that there are numerous decisions of the courts of other states to the effect that when the contract is made in the state where the employer has his place of business, the place where the accident occurs, whether within or without the state, is of no importance. Such is the ruling in Rounsaville v. Central Railroad Co., 87 N.J.L. 371,94 A. 392, wherein it is stated that, "The place where the accident occurs is of no more relevance than is the place of accident to the assured, in an action on a contract of accident insurance, or the place of death of the assured, in an action on a contract of life insurance." In New Jersey and other states in which courts have similarly ruled, compensation to injured workmen is not, so far as we have been able to ascertain, paid exclusively from a state fund as in Oregon. In many of the states decisions similar to that of the New Jersey court above cited are based on the wording of the statute expressly extending the protection provided by the employer's insurance to employes wherever working. We do not intend to imply, from what has just been said, that the jurisdictions in which compensation to injured workmen is paid exclusively from state funds do not permit recovery to workmen for injuries suffered in another state, but quite the contrary. However, in order for any workman to recover compensation for injuries suffered outside the state providing the fund, he must have been engaged, when injured, in discharging some duty incident to his employment in such state.

It is argued that Mr. House's contract of employment was entered into in Oregon; that the injury which caused his death occurred in this state; and that since the company which employed him is an Oregon corporation subject to the act and would ultimately receive the benefit, if any, of his trip to Portland, through its branch at Tulelake, Mr. House was, while in Oregon, protected by the Oregon workmen's compensation law.

The fact that Mr. House's contract of employment was made in Oregon can not, under the circumstances here shown, have any effect on the determination of this case. The location of the work is the controlling factor. Mr. House, after becoming manager of the Tulelake branch, was not thereafter in the state of Oregon, so far as the record shows, except to pass through the state on his way to Portland in connection with his business at Tulelake. The fact that some of his salesmen sold automobiles in Oregon would affect their status only, not his.

In United States Fidelity Guaranty Co. v. IndustrialCommission, 99 Colo. 280, 61 P.2d 1033, the court, after pointing out that in a prior decision it had been stated that, "In every instance where the contract was made . . . and a substantial portion of the services thereunder were to be, and were, performed in this state, recovery under the act has been upheld," went on to say: "It thus appears that to justify recovery under our law the one essential element is that a substantial portion of the work must be done in this state, but that with this must be combined either an accident in Colorado or a contract in Colorado."

In order to receive compensation under the Oregon law the employe must have attained the status of a workman in this state, which he could do only by performing in this state a substantial part of his work. Again referring to the stipulation, we note that Mr. House "was not employed to work in the state of Oregon but was in the state incidental to and in pursuance of this employment as manager of the Tulelake, California, branch of the Turner Chevrolet Company." In view of the facts in this case it is apparent that at the time he was injured Mr. House was not a workman subject to the Oregon workmen's compensation law and entitled to its benefits.

The judgment is reversed and the cause is remanded to the circuit court with instruction to enter there a judgment in favor of the defendant.

KELLY, C.J., and RAND, J., dissent.