Lucas v. Li'l General Stores

221 S.E.2d 257 (1976) 289 N.C. 212

Ola Blanton LUCAS, widow of Leonard M. Lucas, Deceased, Employee
v.
LI'L GENERAL STORES, a Division of General Host Corporation, Employer, and Liberty Mutual Insurance Company, Carrier.

No. 14.

Supreme Court of North Carolina.

January 29, 1976.

Basil L. Whitener and Anne M. Lamm, Gastonia, for plaintiff.

Mullen, Holland & Harrell, P. A., by James Mullen, Gastonia, for defendants.

LAKE, Justice.

It is well settled that to be entitled to maintain a proceeding for compensation under the Workmen's Compensation Act the claimant must have been an employee of the alleged employer at the time of his injury, or, in case of a claim for death benefits, the deceased must have been such an employee when injured. Hicks v. Guilford County, 267 N.C. 364, 148 S.E.2d 240; Askew v. Tire Co., 264 N.C. 168, 141 S.E.2d 280; Richards v. Nationwide Homes, 263 N.C. 295, 139 S.E.2d 645; Hayes v. Elon College, 224 N.C. 11, 29 S.E.2d 137. Otherwise, the Act simply has no application to the claim. Thus, the existence of the employer-employee relationship at the time of the accident is a jurisdictional fact. Notwithstanding G.S. 97-86, the finding of a jurisdictional fact by the Industrial Commission is not conclusive upon appeal even though there be evidence in the record to support such finding. The reviewing court has the right, and the duty, to make its own independent findings of such jurisdictional facts from its consideration of all the evidence in the record. Hicks v. Guilford County, supra; Askew v. Tire Co., supra; Richards v. Nationwide Homes, supra. The claimant has the burden of proof that the employer-employee relation existed at the time the injury by accident occurred.

The Workmen's Compensation Act, in G.S. 97-2(2), defines the term "employee," as used in the Act, as follows:

"The term `employee' means every person engaged in an employment under any appointment or contract of hire or apprenticeship, express or implied, oral or written, including aliens, and also minors, whether lawfully or unlawfully employed, but excluding persons whose employment is both casual and not in the course of trade, business, profession or occupation of his employer * * *."

This statutory definition adds nothing to the common law meaning of the term. Hayes v. Elon College, supra. As Chief Justice Stacy, speaking for the Court, said in Hollowell v. Department of Conservation and Development, 206 N.C. 206, 173 S.E. 603, "An `employee' is one who works for another for wages or salary, and the right to demand pay for his services from his employer would seem to be essential to his right to receive compensation under the Workmen's Compensation Act, in case of injury sustained by accident arising out of and in the course of the employment." Whether this relationship existed at the time of the injury by accident is to be determined by the application of the ordinary common law tests. Richards v. Nationwide Homes, supra; Scott v. Lumber Co., 232 N.C. 162, 59 S.E.2d 425; Hollowell v. Department of Conservation and Development, supra.

In the present case, the Court of Appeals said: "We find * * * that decedent was not an `employee' within the meaning of the Workmen's Compensation Act. There being no employer-employee relationship, the Industrial Commission could not take cognizance of the claim. The order granting plaintiff's claim is reversed." Having reviewed the entire record we concur in this finding and conclusion of the Court of Appeals.

It is clear from the evidence that had Mr. Lucas not been injured in the robbery, he would have had no enforceable claim against Li'l General Stores for compensation for any services rendered by him at the Carolina Avenue store during the week of the robbery. "One who voluntarily assists a servant at the latter's request does not, as a general rule, become the servant of the master so as to impose upon the latter, the duties and liabilities of a master toward such volunteer, or so as to render the master liable to third persons injured by such volunteer's acts or negligence, while rendering such assistance." Reaves v. Power Co., 206 N.C. 523, 174 S.E. 413.

It is undisputed that Mr. Lucas was discharged by Li'l General Stores because he sold beer to a minor in violation of the law of North Carolina and of the policy of Li'l General Stores. Having been employed as Manager of the store at which he was shot, he was familiar with the organization of the company and the limits of the authority of his wife who had succeeded him as Acting Manager of this store.

There is evidence that Mr. Lucas was frequently in the store after his discharge and, while there, did various things to assist his wife in her work. This is entirely consistent with the desire of an unemployed husband to be in the company of his wife at her place of employment, such association not being calculated to disturb her in her work, and to assist her in the performance of her duties, especially where, as here, the wife would otherwise be working alone at night in a location attractive to armed robbers. Even if the claimant's evidence be viewed in the light most favorable to her contention and the evidence for the company be disregarded, the claimant's evidence fails to show the existence of the employer-employee relation between the company and Mr. Lucas. At most, it would support a finding that the claimant, the District Manager, and Mr. Lucas were in collusion to deceive the company with reference to the fact of Mr. Lucas' working at the store.

The testimony of the District Manager is that he knew nothing about this and did not authorize it or consent thereto. His testimony is corroborated by the testimony of other witnesses. At the time of his testimony, he had already voluntarily given notice of his own resignation from the employment of the company, so his own employment would not have been placed in jeopardy by his admission that he knew of and acquiesced in the alleged employment of Mr. Lucas prior to and at the time of the injury.

The evidence is clear and uncontradicted that the District Manager had no actual authority to re-employ Mr. Lucas after the latter's discharge, or to authorize Mrs. Lucas, the Acting Manager of the local store, to do so. It is true that a principal, who has clothed his agent with apparent authority to contract in behalf of the principal, is bound by a contract made by such agent, within the scope of such apparent authority, with a third person who dealt with the agent in good faith, in the exercise of reasonable prudence and without notice of limitations placed by the principal upon the agent's authority. Zimmerman v. Hogg and Allen, 286 N.C. 24, 209 S.E.2d 795; Morpul Research Corp. v. Hardware Co., 263 N.C. 718, 140 S.E.2d 416; Powell v. Lumber Co., 168 N.C. 632, 84 S.E. 1032. This rule, however, has no application where, as here, the third party, when dealing with the agent, knew or in the exercise of reasonable care should have known that the agent was not authorized to enter into the contract. Zimmerman v. Hogg and Allen, supra; Commercial Solvents v. Johnson, 235 N.C. 237, 69 S.E.2d 716; Norfolk R.R. v. Smitherman, 178 N.C. 595, 101 S.E. 208.

In discussing the liability of a principal upon a contract entered into by an agent within the latter's apparent authority, Justice Walker, speaking for the Court in Norfolk R.R. v. Smitherman, supra, said:

"The apparent authority, so far as third persons are concerned, is the real authority, and when a third person has ascertained the apparent authority with which the principal has clothed the agent, he is under no further obligation to inquire into the agent's actual authority. The authority must, however, have been actually apparent to the third person who, in order to avail himself of rights thereunder, must have dealt with the agent in reliance thereon, in good faith, and in the exercise of reasonable prudence, in which case the principal will be bound by acts of the agent performed in the usual and customary mode of doing such business, although he may have acted in violation of private instructions, for such acts are within the apparent scope of his authority. An agent cannot, however, enlarge the actual authority by his own acts without some measure of assent or acquiescence on the part of his principal, whose rights and liabilities as to third persons are not affected by any apparent authority which his agent has conferred upon himself simply by his own representations, express or implied."

In Texas Co. v. Stone, 232 N.C. 489, 61 S.E.2d 348, Chief Justice Stacy, speaking for the Court, said, "One dealing with an agent or representative with known limited authority can acquire no rights against the principal when the agent or representative acts beyond his authority or exceeds the apparent scope thereof." In the Restatement of the Law of Agency, 2d, § 166, it is said, "A person with notice of a limitation of an agent's authority cannot subject the principal to liability upon a transaction with the agent if he should know that the agent is acting improperly." Comment (a) upon this section of the Restatement reads: "If a person has information which would lead a reasonable man to believe that the agent is violating the orders of the principal or that the principal would not wish the agent to act under the circumstances known to the agent, he cannot subject the principal to liability. Any substantial departure by the agent from the usual methods of conducting business is ordinarily sufficient warning of lack of authorization." In 2A C.J.S. Agency § 166, it is said, "Any apparent authority that might otherwise exist vanishes in the presence of the third person's knowledge, actual or constructive, of what the agent is, and what he is not empowered to do for his principal."

Taking the claimant's evidence to be true and disregarding the contrary testimony of the District Manager, it shows that Mrs. Lucas, herself, had, at least, substantial doubt concerning the authority of the District Manager to authorize the re-employment of her husband, for she testified that she asked the District Manager, "Well what about Mr. Pepper and them [his superiors]?" To this, she testified, the District Manager replied, "What they don't know won't hurt them." According to her testimony, denied by the District Manager, their plan was to "run his [Mr. Lucas'] pay through [Mrs. Lucas'] check." That is, the plan was designed to conceal from the company's officials the fact that Mr. Lucas was working at the store and to prepare the payroll so as to make it appear that Mrs. Lucas alone was working, she to divide the pay check with him. This circumstance alone is sufficient to put both Mrs. Lucas and Mr. Lucas upon notice that the District Manager was acting in excess of his authority when he authorized Mrs. Lucas to re-employ her husband, assuming that he did so.

Under these circumstances, we think the conclusion is inescapable that there was no contract between Li'l General Stores and Mr. Lucas re-establishing the relation of employer and employee between them. Thus, he was not the employee of Li'l General Stores at the time of his injury and the Industrial Commission should have dismissed the claim.

Affirmed.