Rehearing Denied April 5 1954.: February 23, 1954.
Before PHILLIPS, Chief Judge, and BRATTON and HUXMAN, Circuit Judges.
For convenience, E. L. Farmer & Company will be hereinafter referred to as Farmer; Clyde Sawyer, assistant manager of Farmer, as Sawyer; James E. Jones, now deceased, as Jones; Ruby Joyce Jones, now Ruby Joyce Summers, as the widow of Jones; M. C. Martin as Martin; Pacific Employers Insurance Company as the insurance company; C. W. Kelley, doing business under the trade name of C. W. Kelley Transport, as Kelley; and Wray Kelley as Wray.
Farmer was engaged in the trucking business at Odessa, Texas; and among other things, it transported oil-well pipe for hire. Farmer was a subscriber to the Workmen's Compensation Act of Texas, Vernon's Ann.Civ.St. art. 8306, and the insurance company was its insurance carrier under the Act.Jones and Martin were in the employ of Farmer as truck drivers. A pipe and supply company in Texas made arrangements with Farmer to transport to Odessa certain used pipe then lying on the ground near Burrton, Kansas. For that purpose, Farmer sent to Kansas eight trucks and truck drivers, including Jones and Martin. Sawyer accompanied the group in an automobile. Kelley was engaged at Hutchinson, Kansas, in the business of trucking and transporting machinery, oil field equipment, and petroleum products; and his employees were under the Workmen's Compensation Act of Kansas. G.S.1949, 44-501 et seq. Wray was a regular employee of Kelley, and he was a qualified operator of caterpillar tractors and booms. Upon arriving in Kansas, Sawyer went to Kelley's place of business and made known to Wray his desire to secure suitable equipment and an operator for use in loading the pipe on the trucks. Wray showed Sawyer a caterpillar tractor and boom and it was agreed between them that such equipment would be used; that Wray would be the operator; and that the rental for the equipment and operator would be $8.50 per hour. The boom was approximately eighteen feet long. Two cables extended from drums or attachments near the operator's position over pulleys at the end of the boom. When Wray and the equipment arrived at the location, Sawyer told him and the truck drivers that the loading operations would begin at the north end of the field and follow the line of pipe to the south. The general plan of operation was that the drivers of two of the trucks not being loaded walked along, carried the ends of the cables attached to hooks, and inserted the hooks in the ends of the pipe. When the hooks had been inserted in the ends of the pipe and the truck being loaded was in position, the pipe was elevated by means of the boom being operated by Wray and placed on the truck. The truck drivers carrying the ends of the cables and inserting the hooks in the ends of the pipe also held the rope fastened to the hooks and guided the pipe being elevated to position on the truck, and then they took out the hooks when the pipe was loaded. If a piece of pipe was not to be picked up, they motioned Wray forward with the tractor and boom. And they gave signals for more slack when it was needed. As each piece of pipe was loaded, the tractor and boom, the truck being loaded, and the men engaged in the loading moved on to the next piece and the operation was repeated. Operations began in the afternoon.After two trucks had been loaded, Sawyer told Wray and the truck drivers to quit for the day and that loading operations would be resumed the following morning. On the following morning, Jones and Martin were carrying the cables and inserting the hooks in the pipe. As the tractor and boom were being moved from the location of one piece of pipe to that of the next, the boom came into contact with the high tension electric line. Jones suffered a shock from which he died and Martin sustained personal injuries. Sawyer was not present at the time of the accident but he arrived soon afterwards and remained there until the loading of the trucks was completed. Pursuant to proceedings had in Texas about which there is no present controversy, the insurance company paid or obligated itself to pay to the widow of Jones for herself and her minor children an aggregate amount of $8,427.50 as death benefits to the dependents of Jones; and pursuant to like proceedings about which there is no controversy, the insurance company paid or obligated itself to pay to Martin an aggregate sum of $933.00.
The widow of Jones, acting in her own behalf and in behalf of the two minor children of herself and Jones, instituted in the United States Court for Kansas an action against Kelley to recover damages for the death of Jones. Jurisdiction was predicated upon diversity of citizenship with the requisite amount in controversy. Negligence on the part of Wray in the operation of the tractor and boom was pleaded as the proximate cause of the accident and resulting death. Martin instituted in the same court a similar action against Kelley seeking damages for his injuries. With leave of the court, the insurance company intervened in each case asserting its right of subrogation and seeking to recover as against Kelley the amount of its payments, such recovery to be out of any damages awarded to plaintiff. After the complaint in intervention had been filed in each case, Kelley filed an amended answer to the complaint of plaintiff and an answer to the complaint in intervention. In such pleading, Kelley denied negligence on his part; pleaded that the sole rights of the widow and surviving children of Jones, and of Martin, were under the Workmen's Compensation Act of Texas; pleaded that Wray was a loaned employee and therefore a servant of Farmer; pleaded that since Jones, Martin, and Wray were employees of Farmer, they were fellow servants; pleaded that Jones and Martin assumed the risk of negligence, if any, on the part of their fellow servant, Wray; pleaded that negligence on the part of Jones and Martin was the proximate cause of the accident with resulting death and injury; and pleaded that Jones and Martin had knowledge of the dangers of the employment and assumed the risk inhering therein. The cases were consolidated for purposes of trial. On the day before the trial to the jury began, the insurance company moved to withdraw and dismiss without prejudice the two complaints in intervention; and the motion was sustained.
The jury returned a verdict in favor of the widow of Jones in the sum of $15,000, and a verdict in favor of Martin in the sum of $18,200. In response to special interrogatories, the jury found that immediately prior to the time the boom came into contact with the electric power line, the line was clearly observable to Wray, to Jones, and to Martin; that neither of such persons saw the electric line prior to the time the boom came into contact with it; that no person connected with the loading of the pipe warned Wray of the presence of the high tension wire or of the danger of the boom coming into contact with it; that Jones had an opportunity at least equal to that of Wray to observe the overhead wire or of the dangerous situation in time to avoid the accident; that Martin did not have an opportunity at least equal to that of Wray to observe such overhead wire or the dangerous situation in time to avoid the accident, but the court disapproved that particular finding; that negligence on the part of Wray in failing to observe properly all obstructions in the path of the tractor and boom was the proximate cause of the accident; and that Jones and Martin were not guilty of contributory negligence. After the return of the verdicts and findings but before entry of judgment, the insurance company, without obtaining leave of court, again filed in each case a motion to intervene, attaching thereto a complaint in intervention in substantially the same language as the previous one. The court determined that in its judgment the verdict in favor of Martin was excessive and that unless a remittitur was filed reducing the amount to $9,000 a new trial would be granted; and the remittitur was filed. The judgment, entered after the filing of the remittitur, provided that the motions of the insurance company to intervene the second time be denied; that the widow of Jones recover from Kelley the sum of $6,572.50, representing the amount of the verdict in her favor less the aggregate amount of workmen's compensation paid her; and that Martin recover from Kelley the sum of $8,067.00, representing the amount of the verdict in his favor as reduced by the remittitur, less the amount of workmen's compensation paid him. Kelley appealed from that part of the judgment making awards against him; and the insurance company appealed from that part denying its motions for leave to intervene, and for failure of the court to grant it recovery as prayed in the complaints in intervention.
Kelley challenges the judgment against him on the ground that it was not his work which was being performed by Wray at the time of the accident; that he had no right of control of the activity or movements of Wray which could have caused or contributed to the cause of the accident; and that therefore he is not liable for damages arising proximately from negligence on the part of Wray in the operation of the tractor and boom. It is argued that Wray was a loaned or hired servant of Farmer while engaged in the loading of the pipe. As we understand, it is the general rule in Kansas that a servant may be lent or hired by his master to another for some special purpose and become the servant of such other person in the performing of the particular service contemplated by the loan or hire.Moseman v. L. M. Penwell Undertaking Co., 151 Kan. 610, 100 P.2d 669. But while a person in the general employ of one person may be lent or hired to another in such way as to become the servant of the person to whom he is lent or hired for the time and the occasion, the mere fact that an employee is sent to do certain work pointed out to him by the person who has made an arrangement with his general employer, standing alone, does not make him that person's servant. Driscoll v. Towle, 181 Mass. 416, 63 N.E. 922; cf. Garner v. Martin, 155 Kan. 12, 122 P.2d 735. And where the owner of machinery or equipment hires or rents it together with an operator in his employ to operate it while performing the particular service contemplated by the hiring or renting, the presumption is that the employee remains the servant of the owner. Malisfski v. Indemnity Insurance Company of North America, 4 Cir., 135 F.2d 910; Baltimore Transit Co. v. State, 184 Md. 250, 40 A.2d 678; Pennsylvania Smelting & Refining Co. v. Duffin, 363 Pa. 564, 70 A.2d 270, 17 A.L.R.2d 1384.
Kelly was engaged in part in the business of hiring or renting equipment with an operator in his employ to perform service for others. The agreement between Sawyer and Wray was that Kelley would rent or hire to Farmer a caterpillar tractor and boom together with an operator to operate the equipment while engaged in the loading operations at a fixed rental or hire of $8.50 per hour. It was further agreed that Wray would be the operator. But it was not expressly agreed that Kelley should relinquish completely his authority over Wray while engaged in the specific service. Farmer, through its servants and employees, told Wray when to start, pointed out to him the particular pipe to be elevated, told him when to stop for the night, and told him when to resume the following morning. But there is no indication in the record that Farmer had or exercised authority to direct Wray in respect to the manner in which he should operate the tractor, raise and lower the boom, or otherwise manage the equipment. If dissatisfied with the manner in which Wray operated the equipment, Farmer could have discontinued the use of the equipment and its operation by Wray, but there is nothing in the record to indicate that Farmer had power or authority to discharge Wray and place the equipment in charge of another operator. On the contrary, it is clear that Farmer did not have any such power. Kelley alone could discharge Wray, take the equipment from his management and control, and place another operator in charge of it. Kelley furnished the fuel for the equipment, transported it to the place of operation, and returned it to his place of business at the conclusion of the service. At the time of the accident, Wray was engaged in performing a special service for Farmer pursuant to an arrangement between Kelley and Farmer, but in doing so he was rendering for Kelley service embraced within his general employment by Kelley, for which Kelley paid him his regular salary. We are clear in the view that under the undisputed facts shown at the trial, Wray remained and was the servant of Kelley. Doty v. Lacey, 114 Cal.App.2d 73, 249 P.2d 550; Hodges v. Holding, 204 Okl. 327, 229 P.2d 555; Charles v. Barrett, 233 N.Y. 127, 135 N.E. 199; Densby v. Bartlett, 318 Ill. 616, 149 N.E. 591, 42 A.L.R. 1406; Babbitt v. Say, 120 Ohio St. 177, 165 N.E. 721; Haney v. Northwest Cartage Service Corp., 336 Ill.App. 97, 82 N.E.2d 826; Thatcher v. Pierce, 281 Pa. 16, 125 A. 302; Wills v. Belger, 357 Mo. 1177, 212 S.W.2d 736; Ryder v. Plumley, 138 Fla. 378, 189 So. 422. In reaching this conclusion, we are not unmindful of Moseman v. L. M. Penwell Undertaking Co., supra, on which Kelley places strong reliance.But that case is distinguishably different from this one. There a truck owned by Forrest H. Harrell and driven by William F. Lindeman struck a boy and he was killed. The action was by the surviving parents of the deceased boy against an undertaking company. Issue was joined between the parties as to whether Lindeman was the servant of the undertaking company or of Harrell at the time of the accident. Evidence was adduced tending to show these facts. Harrell was a florist and the truck was used in his business for the purpose of delivering flowers to customers and to funerals. When flowers were ordered for a funeral, Harrell delivered them to the place of the funeral. Ordinarily the undertaker in charge of a funeral transported the flowers from the place of the funeral to the cemetery. Lindeman was a regular employe of Harrell. On the day in question, the manager of the undertaking company told Harrell that they had more flowers for a certain funeral than they could handle and inquired whether they could use Harrell's truck. Harrell consented, and the manager of the undertaking company told Harrell to have the truck report to the Masonic Temple, park under the fire escape, and report to the undertaking company. Harrell sent Lindeman with the empty truck and directed him to follow the instructions of the undertaking company. The accident occurred after the truck had been loaded with flowers and was enroute with them to the cemetery. After the accident, the manager of the undertaking company told Harrell that there was nothing for him to worry about as the truck and the driver were in the service of the undertaking company and that it was no more than right that the undertaking company should offer to bury the boy without expense to the family. There it was not part of Harrell's regular business to lend or otherwise furnish the truck to undertakers for the transportation of flowers from the place of a funeral to the cemetery. Here, it was part of the regular business of Kelley to rent or hire the equipment with an operator on a rental basis. There, the owner of the truck expressly directed the driver to follow the instructions of the undertaking company. Here, no one on behalf of Kelley expressly directed Wray to follow the instructions of Farmer in respect to the manner of operating the tractor and boom. There, the manager of the undertaking company stated that at the time of the accident the truck and driver were in the service of the undertaking company. Here, no such statement was made on behalf of Farmer.
Kelley attacks the judgment against him on the further ground that the substantive law of Kansas applies in respect to his liability and that under the fellow-servant rule which obtains in that state the widow of Jones, and Martin, were not entitled to recover. In support of the contention it is said that Wray, Jones, and Martin were working in a common employment under the same general direction and control; that it is not necessary to determine who had such direction and control or right of direction and control since the fellow-servant rule would apply in any event; and that the three of them being fellow servants, the widow of Jones, and Martin, were not entitled to recover for death in one instance and injury in the other proximately caused by the negligence of Wray in the operation of the tractor and boom. It is the well established rule in Kansas that where coemployees under the control of one master are engaged in the discharge of duties directed to one common end and their duties are so closely related that each employee must know that he is exposed to the risk of being injured by the negligence of another, they are fellow servants and the master is not liable for the death or injury of one proximately caused by the negligence of the other. Donnelly v. Cudahy Packing Co., 68 Kan. 653, 75 P. 1017; Atchison & Eastern Bridge Co. v. Miller, 71 Kan. 13, 80 P. 18, 1 L.R.A.,N.S., 682; Miller v. Armour & Co., 95 Kan. 690, 149 P. 682; Carter v. Uhrich, 125 Kan. 192, 264 P. 31; Barnaby v. Sears, Roebuck & Co., 132 Kan. 447, 295 P. 715; Burroughs v. Michel, 142 Kan. 814, 52 P.2d 633. But Wray, Jones, and Martin, were not coemployees of a single master. Wray was an employee of Kelley and Jones and Martin were employees of Farmer. Not all being coemployees of a single master, the widow of Jones, and Martin, were not precluded by the fellow-servant rule from recovering from Kelley for death in one instance and injury in the other arising proximately out of negligence of Wray.
Kelley seeks to escape liability on the ground that negligence on the part of Jones and Martin was a proximate cause of the accident. The point is amplified by the argument that Jones and Martin had the clearest view and opportunity to observe the high tension line and to avoid the danger by simply dropping their hold on the hooks and that their failure to keep a proper lookout and exert reasonable care to avoid danger constituted negligence on their part. Wray was operating the tractor and boom. It was his duty to know the position of the boom, to exercise reasonable care in observing conditions immediately adjacent to the boom, to exercise reasonable care to discover the presence of the high tension line, and to exercise like care to prevent the boom coming into contact with the wire. The duties of Jones and Martin were to place the hooks in the ends of the pipe lying on the ground, to guide the pipe when elevated to its position on the truck, and then to disengage the hooks from the pipe. It was not their duty or responsibility to keep a lookout to see that the boom did not come into contact with a high tension overhead wire or other obstruction above the work being done. In any event, the court under instructions to which there can be no criticism submitted to the jury the question of contributory negligence on the part of Jones and Martin. The jury resolved the issue against Kelley, and the finding must stand on appeal.
Kelley advances the further contention that by the recovery of workmen's compensation, the widow of Jones, and Martin, are barred from recovering in this action. The substance of the argument in support of the contention is that if Jones and Martin be treated as employees of Farmer, upon the recovery of workmen's compensation, any right of action which they may have had against Kelley became barred under the Workmen's Compensation Act of Texas; and that if Jones and Martin be treated as special employees of Kelley, with the right to recover benefits under the Workmen's Compensation Act of Kansas, the remedy under such Act is exclusive as between them and bars these actions. The courts in Texas have iterated and reiterated the rule that the recovery of benefits under the Workmen's Compensation Act of that state does not preclude an injured workman or the dependents of a deceased workman from maintaining a common law action for damages against a third party tort-feasor whose negligence caused the injury or death; but if the insurance carrier is not a party to the action the amount recovered from the wrongdoer is limited to the excess of damages over the compensation collected. Lancaster v. Hunter, Tex.Civ.App., 217 S.W. 765; Hanson v. Ponder, Tex.Com.App., 300 S.W. 35; Pedigo & Pedigo v. Croom, Tex.Civ.App., 37 S.W.2d 1074; Texas Employers Insurance Association v. Brandon, 126 Tex. 636, 89 S.W.2d 982; Houston Gas & Fuel Co. v. Perry, 127 Tex. 102, 91 S.W.2d 1052. Treating Jones and Martin as employees of Farmer, nothing contained in the Workmen's Compensation Act of Texas precludes these actions against Kelley as a third party tort-feasor whose negligence proximately caused death in one instance and injury in the other. It is the rule in Kansas that the remedies provided by the Workmen's Compensation Act of that state are exclusive when the workman and his employer are operating under the act and the injury or death is one within the purview of the act. Shade v. Ash Grove Lime & Portland Cement Co., 92 Kan. 146, 139 P. 1193; Id., 93 Kan. 257, 144 P. 249; Echord v. Rush, 124 Kan. 521, 261 P. 820; Jennings v. Kansas Power & Light Co., 152 Kan. 469, 105 P.2d 882; Bailey v. Mosby Hotel Co., 160 Kan. 258, 160 P.2d 701; Hoffman v. Cudahy Packing Co., 161 Kan. 345, 167 P.2d 613; Duncan v. Perry Packing Co., 162 Kan. 79, 174 P.2d 78; Crawford v. Atchison, Topeka & Santa Fe Railway Co., 166 Kan. 163, 199 P.2d 796. But Jones and Martin were not employees of Kelley and they were not under the Workmen's Compensation Act of Kansas.
Taking up the appeals of the insurance company, error is predicated upon the action of the court in denying the motions to intervene in the actions the second time. Since Farmer and Jones and Martin were under the Workmen's Compensation Act of Texas, and since the insurance contract was issued in Texas and was to be performed there, the rights of the widow of Jones, and Martin, and the insurance company, as between themselves, must be determined by the law of that state. And under the law of Texas where compensation is paid under the Act to an injured employee or the dependents of a deceased workman, the one making the payment or payments is subrogated to the extent of the payments to the rights of the injured workman or the dependents of the deceased workman against a third party tort-feasor whose negligence proximately caused the injury or death. Fort Worth Lloyds v. Haygood, Tex.Sup., 246 S.W.2d 865. It was this substantive right of subrogation to recover as against Kelley which the insurance company asserted in its complaints in intervention attached to the motions to intervene. But the time and manner of asserting such right in the actions pending in the United States Court in Kansas was a procedural matter to be determined by the Federal Rules of Civil Procedure, 28 U.S.C., not the local law of Texas.
Rule of Civil Procedure 24(a) deals with intervention of right, and it provides among other things that upon timely application anyone shall be permitted to intervene in an action when the representation of the applicant by existing parties is or may be inadequate and the applicant is or may be bound by the judgment in the action, or when the applicant is so situated as to be adversely affected by a distribution or other disposition of property which is in the custody or subject to the control of the court. Rule 24(b) concerns itself with permissive intervention, and it provides among other things that upon timely application anyone may be permitted to intervene in an action when the applicant's claim or defense and the main action have a question of law or fact in common. And, it further provides that in exercising its discretion, the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. To authorize an intervention as a matter of right under Rule 24(a) the intervenor must have an interest in the subject matter of the litigation of such a nature that he will gain or lose by the direct legal operation of the judgment. Pure Oil Co. v. Ross, 7 Cir., 170 F.2d 651. Being subrogated in part to the rights of the widow of Jones, and Martin, against Kelley as a third party whose negligence was charged to be the proximate cause of death in one instance and injury in the other, the insurance company had sufficient interest in the subject matter of the litigation to intervene as a matter of right. Deauville Associates v. Eristavi-Tchitcherine, 5 Cir., 173 F.2d 745; Clark v. Sandusky, 7 Cir., 205 F.2d 915. And that right was exercised in full measure when the insurance company intervened the first time. It was then a party to each action and occupied the unfettered position of recovering in full the amount of its payments if the awards of damages against Kelley were sufficient for that purpose. In other words, it was in position to be reimbursed in whole or in part out of the first money recovered from Kelley, depending upon the amount of the recoveries. But, while in that position, and on the eve of the trial, the insurance company elected to dismiss without prejudice its complaints in intervention. Whether it pursued that course as a means of keeping from the jury evidence relating to the widow of Jones, and Martin, receiving compensation from the insurance company, or whether some other reason underlay the dismissal of the interventions is a matter of no present concern. For reasons satisfactory unto itself, the insurance company dismissed its intervention in each case and that amounted to an abandonment or waiver of its right further to proceed by intervention in the then pending actions.
Having intervened once and having voluntarily dismissed its interventions, the motions to intervene the second time and assert the same causes of action which were pleaded in the first complaints in intervention were addressed to the sound judicial discretion of the court and its action in denying them will not be disturbed on appeal unless such discretion was abused. After the return of the general verdicts and the answers to the special interrogatories, Kelley filed a motion to set aside such verdicts and answers and for judgment in his favor notwithstanding the verdicts and findings. The motion was partially heard and rulings were made in respect to portions of it. Following these intermediate proceedings, and more than five months after the return of the verdicts and the findings in response to the special interrogatories but before entry of the judgment, the insurance company, without obtaining leave of court to do so, filed its motions to intervene the second time. In connection with the denial of the motions, the court stated that as the result of the voluntary dismissal of the original complaints in intervention the court withheld from the jury all evidence pertaining to the payment of compensation; stated that in all probability the trial would have been quite different if the insurance company had not voluntarily withdrawn from the cases for the evidence relating to the payment of compensation would then have been admissible; and stated that the motions to intervene after the return of the verdicts were not made timely. In view of the fact that after being a party to each action, the insurance company voluntarily withdrew and retired to a position behind the curtain, so to speak, and remained there during the trial and for more than five ...