author: MR. JUSTICE WEBER MR. JUSTICE GULBRANDSON,

text:
    ROBERT KIMES, Claimant and Respondent, v. CHARLIE'S FAMILY DINING & DONUT SHOP, Employer, and Pacific Employers Insurance Company, Defendant and Appellant.
    No. 88-63.
    Submitted on Briefs May 26, 1988.
    Decided Aug. 9, 1988.
    Rehearing Denied Sept. 1, 1988.
    759 P.2d 986.

      Utick & Grosfield, Andrew J. Utick, Helena, for defendant and appellant.
    Richard J. Pyfer, Helena, for claimant and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Claimant Mr. Kimes received disability benefits for a work-related injury to his knee until he entered a settlement agreement with the insurer, Pacific Employers Insurance Company (Pacific). Pacific appeals the ruling of the Workers’ Compensation Court which set aside the settlement. Mr. Kimes cross appeals the discontinuation of his temporary total disability benefits. We affirm.

The issues are:

1. Did the lower court err in setting aside the full and final settlement agreement on the grounds of mutual mistake of fact?

2. Did the lower court err by failing to continue temporary total disability benefits beyond August 20, 1986?

Mr. Kimes injured his knee in 1983 when he fell down steps during his employment as a cook for Charlie’s Family Dining and Donut Shop. The employer accepted liability for benefits and paid compensation to Mr. Kimes. An orthopedic physician repaired a ruptured cruciate ligament in the knee, after which he assigned Mr. Kimes a 30 percent impairment rating to his left knee and leg. The physician felt, however, that Mr. Kimes should be able to return to work as a cook. In January 1985, the parties entered a full and final settlement agreement for a $14,500 lump sum.

In November 1985, Mr. Kimes returned to see his physician because of continuing problems with his left knee. The physician referred Mr. Kimes to a second doctor, who suggested that Mr. Kimes’s problems could be due to a tear of the medial meniscus, which is a cartilage in the knee. Surgery was performed, a tear was found, and the meniscus was removed. The first physician has testified by deposition that X-rays show that the tear in the meniscus was present before the settlement was reached, but that he simply did not detect it.

Mr. Kimes petitioned the Workers’ Compensation Court to reopen his case based on a mutual mistake of medical fact. The court held a hearing at which Mr. Kimes and the attorneys for both sides presented testimony. The depositions taken of the physician both before and after the settlement were also available to the court. The court set aside the settlement agreement and ruled that the employer is entitled to a credit for the settlement amount.

I

Did the lower court err in setting aside the full and final settlement agreement on the grounds of mutual mistake of fact?

As this Court discussed in Kienas v. Peterson (Mont. 1980), [191 Mont. 325,] 624 P.2d 1, 37 St.Rep. 1747, general contract law gives courts the right to reopen a compromise settlement when there has been a non-negligent mutual mistake of material fact. In Kienas, the claimant suffered an injury to his back. After a full and final settlement was made, doctors concluded that the injury had also aggravated claimant’s previous condition of cerebral palsy, rendering him totally disabled. Ruling that there was a mutual mistake of material fact, this Court set aside the settlement agreement.

In Weldele v. Medley Development (Mont. 1987), [227 Mont. 257,] 738 P.2d 1281, 44 St.Rep. 1062, the claimant had suffered an industrial shoulder injury. At the time full and final settlement was made, the injury had been diagnosed as a rotator cuff tear and a healed carpal tunnel syndrome. After the settlement, the claimant was diagnosed as having thoracic outlet syndrome in the shoulder. The physician testified that it was more probable than not that the claimant’s work-related injury was the cause. This Court affirmed the lower court’s conclusion that those circumstances constituted a mistake of fact upon which the settlement could be reopened.

In contrast, where findings in medical reports following a settlement are consistent with those prior to the settlement, where the impairment rating is substantially unchanged, and where the claimant is in much the same condition as at the time of settlement, there is no mutual mistake of fact justifying reopening a settlement. Sollie v. Peavey Co. (Mont. 1984), [212 Mont. 197,] 686 P.2d 920, 41 St.Rep. 1684. Variance in the symptom level, where claimant knew this level would vary, is not enough. Sollie, 686 P.2d at 924.

Pacific argues that there was no mutual mistake of fact here. It asserts that Mr. Kimes and his attorney were aware at the time of the settlement that there were potentially permanent problems with the knee and that those problems were related to Mr. Kimes’s industrial accident. However, not only has Mr. Kimes’s disability rating increased as a result of the post-settlement surgery to remove the torn meniscus, but his prognosis now includes probable degenerative changes in his knee joint. He now requires pain medication and has been advised not to return to his former line of work as a cook. The X-rays show that Mr. Kimes had a tear in his medial meniscus at the time of settlement, and it is undisputed that this was unknown to the parties when settlement was made.

While the dissent argues that the Workers’ Compensation Court does not have statutory authority to set aside this full and final compromise agreement, the parties did not raise that argument. Further, this Court is not so limited where there has been mutual mistake. We conclude that the uncontradicted medical evidence establishes a material mistake of fact relating to both the nature and extent of Mr. Kimes’s injury. We hold that the full and final settlement entered in this case may be reopened on the basis of this material mistake of fact.

II

Did the lower court err by failing to continue temporary total disability benefits beyond August 20, 1986?

The Workers’ Compensation Court terminated Mr. Kimes’s temporary total disability benefits as of the date the physician, by deposition, stated that Mr. Kimes had reached his maximum medical recovery. Mr. Kimes argues that he is entitled to an award of continued temporary total disability benefits until he reaches a point at which he can return to the job market.

Under the statutory scheme in effect at the time of Mr. Kimes’s injury, temporary total disability did not exist past the time of maximum healing. Section 39-71-116(19), MCA (1983), provided:

“ ‘Temporary total disability’ means a condition resulting from an injury as defined in this chapter that results in total loss of wages and exists until the injured worker is as far restored as the permanent character of the injuries will permit. Disability shall be supported by a preponderance of medical evidence. [Emphasis supplied.]”

The physician testified on August 20, 1986, that Mr. Kimes had reached maximum healing. We conclude that the lower court was correct in terminating temporary total disability benefits as of August 20, 1986. This does not in any way constitute a ruling on Mr. Kimes’s right to permanent total or permanent partial disability benefits.

Affirmed as to the result reached.

MR. JUSTICES HARRISON, SHEEHY, McDONOUGH and HUNT concur.

MR. JUSTICE GULBRANDSON,

dissenting:

I respectfully dissent.

In my view the Workers’ Compensation Court erred procedurally and substantively in setting aside the full and final settlement.

The majority in this case, as in Weldele v. Medley Development (Mont. 1987), [227 Mont. 257,] 738 P.2d 1281, 44 St.Rep. 1062, has tacitly approved the unauthorized practice, by the Workers’ Compensation Judge, of setting aside full and final settlements when the legislature has expressly removed such authority from the Workers’ Compensation Court.

Section 39-71-204(2), (1985) MCA, applicable to this case, includes the following:

“[E]xcept as provided in 39-71-2908, the division or the workers’ compensation judge shall not have the power to rescind, alter, or amend any order approving a full and final compromise settlement of compensation.” (Emphasis added.)

Section 39-71-2908, (1985) MCA, states:

“All orders allowing full and final compromise settlements of workers’ compensation claims shall be immediately, referred to the workers’ compensation judge, and the judge may, within 10 days of the judge’s receipt of an order, disapprove an order allowing a full and final compromise settlement.”

In addition, Section 39-71-2909, (1985) MCA, provides:

“The judge may, upon the petition of a claimant or an insurer that the disability of the claimant has changed, review, diminish, or increase . . . any benefits previously awarded by the judge or benefits received by a claimant through settlement agreements. However, the judge may not change any final settlement agreement or award of compensation more than 4 years after the settlement has been approved by the division or any order approving a full and final compromise settlement of compensation.” (Emphasis added.)

Here the Division entered its order approving full and final compromise settlement on February 7, 1985 and said order was then referred to the Workers’ Compensation Judge, pursuant to Section 39-71-2908, (1985) MCA, who reviewed the file, approved the order, and closed the claimant’s file. After that point, in my view, the Workers’ Compensation Court was without authority to set aside the settlement agreement. A review of Kienas, relied upon by the majority, is necessary to explain my view. In Kienas, the claimant, who was not represented by counsel, entered into a full and final compromise settlement for a payment of $4,040, where the claim involved potential payments in excess of $115,000. The Workers’ Compensation Court refused to set aside the settlement, and on appeal, this Court, finding the case to be unique, applied contract law and reversed and remanded, without discussing Section 39-71-204, (1985) MCA and Section 39-71-2909, (1985) MCA, which limits the power of the Workers’ Compensation Court to rescind, alter, or amend an order approving a final compromise settlement. Upon rehearing Kienas, this Court considered Section 39-71-204, (1985) MCA and Section 39-71-2909, (1985) MCA, stating the following:

“Petitioner argues that the Workers’ Compensation Court had no power to alter or rescind a full and final compromise settlement agreement four years after the parties had executed the same. Section 39-71-204, MCA. However, in Kienas, the Workers’ Compensation Court did not set aside the agreement. This Court set aside the agreement. Our appellate power is not limited to section 39-71-204 nor 39-71-2909, MCA. See Section 3-2-204, MCA.

“It is a universally accepted tenet of contract law, statutory in our state, that consent to the contract is lacking if it is entered into through mutual mistake or a material fact by the parties. We found such a mutual mistake in the compromise settlement agreement in this case. In applying ordinary contract law to reach our result, we are not unduly broadening the possibilities of reopening workers’ compensation settlements. We are simply finding here that a contract to settle did not exist in the first place.” (Emphasis added.) Kienas v. Peterson, Opinion on Rehearing (Mont. 1981), 38 St.Rep. 320, 321.

In addition to the lack of authority by the Workers’ Compensation Judge to set aside the settlement agreement, I have a second problem with the majority opinion. If the majority is “simply finding here that a contract to settle did not exist in the first place” (see Kienas quote above) then, in my opinion, it can only do so by ignoring the pre-injury and post-injury medical history, in addition to the expressed intent of the parties as set forth in the settlement agreement. The medical history indicates that claimant’s anterior cruciate ligament was torn in 1979 when, as a pedestrian, he was struck by an automobile and that such pre-existing problem led to the industrial injury, and that following surgery the cruciate ligament was better than it had been prior to the first slip and fall at work, and that after reaching a medically stable condition, the claimant, on the first day he was returning to work, injured the knee in a non-industrial motorcycle accident. The medical record is clear that the only permanent injury sustained by claimant was confined to the lower left extremity and Section 39-71-705, (1985) MCA, limits permanent partial disability payments for such an injury to 200 weeks. Here, the defendant’s payments were the equivalent of 215.96 weeks of benefits. These factors, in my opinion, indicate that the claimant, and his attorney, were fully cognizant of the material facts when they both signed claimant’s petition, prepared by his counsel, which petition reads as follows:

“The undersigned claimant was accidentally injured on June 16, 1983, while employed by Charlie’s Family Dining & Donut Shop, an employer enrolled under Compensation Plan No. II of the Montana Workers’ Compensation Act. The claim was filed and accepted by the insurer for the payment of any compensation and medical benefits due.

“The total compensation paid to date is $16,408.00.

“The total medical and hospital benefits paid to date are $5,250.00.

“A controversy exists between this claimant and insurer over the amount and duration of compensation. This controversy has been resolved by an agreement between the claimant and the insurer wherein the claimant agrees to accept the sum of Fourteen Thousand Five Hundred ($14,500.00) Dollars in a lump sum in a full and final compromise settlement, which represents compensation for 129+ weeks. Further medical and hospital benefits are expressly hereby reserved by the claimant unless otherwise indicated in this petition. This settlement includes attorney fees.

“The claim [sic] hereby petitions the Division of Workers’ Compensation, with the concurrence of the above named insurer, for approval of this petition and that the case be fully and finally closed on the basis set forth above. The claimant understands that by entering into a full and final compromise settlement, both the named insurer and the claimant agree to assume the risk that the condition of the claimant, as indicated by reasonable investigation to date, may be other than it appears, or it may change in the future. The claimant further understands that another settlement option is available to him which would allow the settlement to be reconsidered within a four-year period, but finds that closing the settlement finally at this time is in his best interest. The claimant understands that if this petition is approved, the claim is forever closed and can never again be reopened.” (Emphasis added.)

DATED this 15 day of January, 1985.

(signed) Robert Kimes

Robert Kimes, Claimant

2131 9th Avenue

Helena, Montana 59601

WITNESS:

(signed) John C. Doubek

The Defendant hereby concurs and joins in the foregoing petition for full and final compromise settlement.

DATED this 28 day of January, 1985.

(signed) Andrew J. Utick

Authorized Representative its Attorney

It is obvious that the language used was in direct response to the Kienas decision, and was drafted by counsel for claimant to meet the defendant’s requirements and to avoid the possibility of the agreement being set aside. It appears that the English language does not contain words adequate to draft a legally enforceable “full and final compromise settlement.”

I would reverse.

MR. CHIEF JUSTICE TURNAGE joins in the foregoing dissent of MR. JUSTICE GULBRANDSON.


source: Caselaw Access Project

author: MR. JUSTICE GULBRANDSON

license: Public Domain

text:
    RAMONA MEDDERS and Richard Medders, Plaintiffs and Appellants, v. ARNOLD JOYES, Defendant and Respondent.
    No. 88-77.
    Submitted on Briefs July 14, 1988.
    Decided Aug. 9, 1988.
    758 P.2d 769.

      Kevin T. Sweeney, Sweeney & Healow, Billings, David Cybulski, Plentywood, for plaintiffs and appellants.
    Habedank, Cumming, Best, Maltese & Savage, Robert J. Savage, Sidney, for defendant and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Ramona and Richard Medders (the Medders) appeal a Sheridan County District Court grant of summary judgment to Arnold Joyes (Joyes). We affirm.

On May 27, 1984, vehicles driven by Ramona Medders and Arnold Joyes collided on a well graveled and recently graded county road in Sheridan County, Montana. Medders was traveling north and Joyes was traveling south on the county road. The head-on collision occurred at the crest of a hill at approximately 3:00 p.m. in good weather. Sheridan County Deputy Sheriff Brost (Brost) arrived at the accident scene at approximately 4:00 p.m. to find Ramona Medders and her eleven-year-old daughter, Tracie, trapped in their 1979 Chrysler Cordoba. Brost also found Joyes at the wheel of his 1984 Ford Bronco II and Arnold’s wife, Iris Joyes, unconscious in the front passenger seat. All four accident victims were subsequently transported by ambulance to a Plentywood hospital where Iris Joyes later died of injuries she sustained in the accident.

Brost conducted an examination of the accident scene and noted his findings on a State of Montana accident investigation report form. Sheriff Holt (Holt) photographed the accident scene before the vehicles were moved. Brost determined that the gravel road was twenty-two feet wide at the point of impact, and that the eastern edge of the skid mark left by the right rear tire of the Medders’ vehicle was twelve feet from the eastern edge of the road. The eastern most edge of the skid mark made by the left rear tire of the Joyes’ vehicle was twelve feet nine inches from the eastern edge of the road. The Medders’ vehicle left a skid mark twenty-nine feet long and the Joyes’ vehicle left a twenty-one foot five inch skid mark. The accident occurred to the north side of the crest of a hill with the Joyes’ vehicle nearing the crest and the Medders’ vehicle on the downhill side.

Sheriff Holt’s photographs portray the two vehicles where they settled after recoil from the force of the impact. The rear end of both vehicles shifted to the east immediately after impact. Brost determined that the two vehicles collided primarily on the left front halves and noted the position of the two vehicles at impact on his accident investigation report and deposition diagrams. Officer Brost’s calculations and Sheriff Holt’s photographs place the Medders’ vehicle in the lane of traffic properly occupied by the Joyes’ vehicle immediately before impact.

On March 5, 1986, the Medders filed a complaint alleging that Arnold Joyes operated his vehicle in a negligent manner thereby causing the accident in question. Joyes moved for summary judgment on September 10, 1987. The District Court granted summary judgment to Joyes on October 15, 1987, and issued the following findings:

“1. That drivers of motor vehicles in the State of Montana have an obligation, pursuant to Section 61-8-321, MCA, to drive upon the right half of the roadway, with three statutory exceptions, none of which apply to the case at bar.

“2. The physical facts of the subject accident, which have not been controverted or rebutted by Plaintiffs, show the following:

“(a) That prior to and at the time the collision, Defendant Joyes’ vehicle was being driven in the right half of the subject county road pursuant to Section 61-8-321, MCA;

“(b) That prior to and at the time of the collision, Plaintiff Ramona Medders’ vehicle was being driven in a northerly direction within Defendant Joyes’ southbound lane of traffic.

“3. That there has been no credible or admissible evidence indicating excessive speed on the part of either Plaintiff Ramona Medders or Defendant Joyes.

“4. That there has been no substantial evidence offered by the Plaintiffs to raise a genuine issue of fact that the accident would not have occurred but for the fact that Plaintiff Ramona Medders was driving her vehicle outside the right half of the roadway in violation of Section 61-8-321, MCA.

“5. The materials offered by Plaintiffs in opposition to Defendant’s motion for summary judgment are not material or of a substantial nature, but rather [are] fanciful, frivolous, gauzy, or merely suspicious.”

The Medders appeal the District Court’s grant of summary judgment to Joyes and we identify the following issue for review: Do genuine issues of material fact exist which preclude summary judgment?

The Medders assert that there are several genuine issues of material fact in this case. Summary judgment is improper where genuine issues of material fact exist. Rule 56(c), M.R.Civ.P. The Medders’ burden on this appeal is to establish the existence of a genuine issue of material fact. Eitel v. Ryan (Mont. 1988), [231 Mont. 174,] 751 P.2d 682, 684, 45 St.Rep. 521, 524.

The Medders first claim that there is a factual dispute as to the location of the two vehicles before and after impact. On the basis of his accident investigation, Officer Brost placed the Medders’ vehicle primarily in the left lane of traffic in violation of Section 61-8-321, MCA. In support of his motion for summary judgment, Joyes also submitted an affidavit from A.D. Pipkin (Pipkin), an accident investigation expert, who on June 5, 1984, investigated the scene of this accident. Pipkin studied Brost’s accident investigation report, surveyed the accident site, examined the damaged vehicles, and also concluded that Ramona Medders was on the wrong side of the road at the time of the collision.

In opposition to Joyes’ motion for summary judgment, the Medders submitted an affidavit from an ambulance attendant, Paula Tinsley (Tinsley), who attended to Ramona Medders at the accident scene. In her September 23, 1987 affidavit, Tinsley recalled her two and one-half year old perception that both vehicles were near the middle of the road, that Joyes’ vehicle was substantially in the wrong lane of traffic, and that the Medders’ vehicle was substantially in the correct lane of traffic. Tinsley arrived sometime after the accident and her recollections are of the shifted vehicle positions after impact and recoil. Unlike Brost and Pipkin, Tinsley did not investigate the accident scene or make any measurements to determine the location of the vehicles immediately prior to and at the time of impact. Medders also allege that Holt’s photographs and the coroner’s report concerning Mrs. Joyes’ death conflict with Brost’s measurements and conclusions. The Medders did not submit any independent accident investigation reports or other expert evidence regarding the circumstances of the accident to support their allegations.

The Medders also attempt to justify Ramona Medders’ failure to drive on the right side of the road by contending that the county road in question contained deep ruts which forced traffic to drive near the center of the road. Holt’s photographs and Brost’s deposition, on the other hand, evidence a well graded and graveled two-lane county road with no ruts at the location of the accident.

Initially we note that the Medders’ claim that a negligence case such as here presented is not susceptible to adjudication by summary judgment. Brown v. Merrill, Lynch, Pierce, Fenner & Smith, Inc. (1982), 197 Mont. 1, 10, 640 P.2d 453, 458. Joyes cites to Brohman v. State of Montana (Mont. 1988), [230 Mont. 198,] 749 P.2d 67, 45 St.Rep. 139, for the proposition that this Court will affirm a grant of summary judgment in a negligence case where “it is clear that a party has breached a duty and caused an accident.” Brohman, 749 P.2d at 69 (citing Birky v. Johnson (Mont. 1986), [220 Mont. 413,] 716 P.2d 198, 43 St.Rep. 488). We find the reasoning in Brohman to be applicable to the instant case.

The District Court concluded that the Medders’ evidence in opposition to the motion for summary judgment was “not material or of a substantial nature . . .” We agree. Although the Medders dispute the fact that Ramona Medders was traveling in the wrong lane of traffic, Tinsley’s affidavit and conclusory allegations as to what the photographs portray are not sufficient to give rise to a genuine issue of material fact in this case.

The Medders have not presented any evidence to support the existence of a genuine issue of material fact regarding the location of the vehicles at the time of the collision. Ryan, 751 P.2d at 684. Where reasonable minds cannot differ as to the cause of an accident, questions of fact may be determined as a matter of law. Brohman, 749 P.2d at 70, (citing Hartley v. State (Wash. 1985), 698 P.2d 77, 81). The overwhelming evidence in this case supports the District Court’s conclusion that Ramona Medders’ negligence caused the accident and the District Court properly granted summary judgment.

The Medders next contend that there is a genuine issue of material fact as to whether Joyes was speeding at the time of the accident. The facts concerning the speed of the Joyes’ vehicle are not in dispute. Joyes admits that he was driving approximately forty miles an hour. The District Court concluded that the Medders had failed to present any credible or admissible evidence indicating that Joyes was speeding. The only evidence presented by the Medders with regard to the appropriate speed for this particular road was Ramona Medders’ statement that she felt that eighteen to twenty miles an hour was all she could handle in her car. In a written statement dated June 13, 1984, Ramona Medders claimed to have been traveling approximately thirty-five miles an hour immediately before the accident. After instigating this litigation, Ramona Medders changed her testimony to reflect that she was traveling eighteen to twenty miles an hour. On the other hand, Pipkin, in his affidavit, stated that forty miles an hour was not excessive under the road and driving conditions present at the time of the accident. In addition, Richard Medders stated in his deposition that he had traveled the same county road on several occasions at speeds of thirty-five to fifty miles an hour.

The District Court in effect made a conclusion of law based on the undisputed facts in its determination that Joyes was not speeding. Such questions of law are properly decided by the District Court. Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact (1982), 99 F.R.D. 465, 487. The Medders have presented no evidence to support their allegation that Joyes was driving too fast. On the contrary, the record of this case indicates that Mr. Joyes was driving in a reasonable and prudent manner when his vehicle was struck by Ramona Medders’ vehicle which was being driven in the wrong lane of traffic.

Section 61-8-321, MCA, provides that all vehicles shall be driven on the right side of the roadway with certain exceptions not applicable to this case. The District Court concluded that Ramona Medders violated this statute and that the accident would not have occurred but for her negligence in driving on the wrong side of the roadway. The Medders assert that the District Court incorrectly held this violation of a statute to be negligence per se and that the lower court should instead have determined whether Ramona Medders and Arnold Joyes drove in a reasonable and prudent manner.

We find nothing in the order of the District Court to suggest that it found Ramona Medders’ violation of Section 61-8-321, MCA, to be negligence per se. The District Court reviewed the evidence and concluded that Ramona Medders was the only negligent party. We have reviewed the pleadings, affidavits, answers to interrogatories, and the remainder of th'e record in this case and conclude that summary judgment was properly granted. Eitel, 751 P.2d at 684.

Joyes requests that he be awarded attorney’s fees and costs of this appeal pursuant to Rule 32, M.R.App.P. We decline to award attorney’s fees in this case because we find that appellants’ arguments, although not persuasive, were within the bounds of reasonable appellate argument. LaForest v. Texaco, Inc. (1978), 179 Mont. 42, 585 P.2d 1318. Costs of this appeal, other than attorney’s fees, are to be awarded to Joyes as the prevailing party pursuant to Section 25-10-104(2), MCA.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER, SHEEHY, McDONOUGH and HUNT concur.


author: MR. JUSTICE WEBER

text:
    CLAYTON E. DeVOE, Petitioner and Appellant, v. The DEPARTMENT OF REVENUE OF MONTANA, Missoula County; and Fern Hart, the Missoula County Treasurer, Respondents.
    No. 88-80.
    Submitted on Briefs June 22, 1988.
    Decided Aug. 9, 1988.
    759 P.2d 991.

      David Rodli Law Offices, Missoula, for petitioner and appellant.
    Larry G. Schuster, Dept. of Revenue, Helena, Robert L. Deschamps, III, Co. Atty., Missoula, Michael W. Sehestedt, Deputy Co. Atty., for respondents.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Mr. DeVoe appeals a decision of the District Court for the Fourth Judicial District, Missoula County, which sustained a prior decision of the State Tax Appeal Board (STAB) regarding ad valorem taxes on certain commercial properties for the years 1980, 1981, 1982, and 1984. We reverse the District Court with directions to remand the matter to STAB.

Mr. DeVoe argues that the District Court erred in upholding the STAB decision regarding the Department of Revenue (DOR) appraisal of his property. He raises five issues on appeal:

1. Did STAB err by refusing to consider Mr. DeVoe’s own appraisal of the property?

2. Was the STAB order erroneous because the board failed to grant Mr. DeVoe a reduction in appraisal value based on the manual disparity issue?

3. Did STAB err by not reducing the value of Mr. DeVoe’s property by the same amount as it had other comparable properties?

4. Did STAB err by not considering the effect of a zoning change on one of Mr. DeVoe’s properties?

5. Did the District Court err by refusing to review the record or to consider the merits of Mr. DeVoe’s appeal from STAB?

The appellant, Mr. DeVoe, owns two commercial apartment complexes in Missoula, Montana. Beginning in 1980, Mr. DeVoe challenged DOR’s assessment of his properties for ad valorem tax purposes. The last challenge for purposes of this appeal was for the 1984 tax year. The Missoula County Tax Appeal Board upheld DOR’s valuations, with the exception of several issues unrelated to the present appeal. STAB consolidated the appeals for all years and issued its Findings of Fact, Conclusions of Law, and Order in December 1984. Mr. DeVoe appealed that order to the District Court. That court “sustained” the STAB decision, with the exception of the 1983 tax year which was remanded to STAB.

I

Did STAB err by refusing to consider Mr. DeVoe’s own appraisal of the property?

In its order, STAB made the following finding:

“[A] sales ratio study is only one side of the equation which the Montana Supreme Court decreed must be satisfied. The taxpayer presented no evidence to show the market value of the subject property or the ratio of that value to the appraised value as determined by the DOR.”

Mr. DeVoe argues that he did present evidence of market value. He presented letters from two bank officials regarding a decline in property values in Missoula. More significantly, he presented evidence of market value through his own testimony. The board also reached the following conclusions:

“This Board has never accepted as valid an appraisal done by a property owner on his own property. The Board concludes that accepting the taxpayer’s appraisal in preference to the appraisal done by the DOR would be highly improper.

“The taxpayer failed to meet the criteria set down by the Montana Supreme Court as a standard for this Board to follow in making its decisions in cases based on an alleged disparity between residential and commercial properties.”

Section 15-8-111, MCA, provides that generally all taxable property must be assessed at 100% of its market value. Subsection (2)(a) of that statute defines market value:

“Market value is the value at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”

In Department of Revenue v. Paxson (1983), 205 Mont. 194, 198, 666 P.2d 768, 770, we held that the county and state boards should have considered the theory and figures offered by the taxpayer and given an indication why they did not adopt the taxpayer’s approach, although it did not follow that those boards were bound to adopt the taxpayer’s theory and figures. We conclude that STAB’s finding that Mr. DeVoe presented no evidence of market value was clearly erroneous. We further hold that STAB’s conclusion that it would not accept an appraisal done by the taxpayer and would not consider the same was an abuse of discretion. We therefore remand in order that STAB may reconsider this evidence. We point out that under Paxson, STAB is required in that reconsideration to consider the theory and evidence offered by the taxpayer.

II

Was the STAB order erroneous because the board failed to grant Mr. DeVoe a reduction in appraisal value based on the manual disparity issue?

This Court, in Department of Revenue v. State Tax Appeal Bd. (1980), 188 Mont. 244, 613 P.2d 691, was faced with a DOR practice of appraising residential property by using an appraisal manual reflecting 1971 replacement costs while appraising commercial property by using an appraisal manual reflecting 1976 replacements costs. Both residential and commercial property were within the same legislative classification. Section 15-6-134, MCA. The Court stated the following conclusion:

“Given the legal and factual premises noted, the method used by the Department in these cases would seem, on its face, to have violated uniformity, equal protection and due process requirements. If different valuation statistics are applied to different pieces of property in the same legal classification, an illegal disparity in valuation is likely to result.”

Department of Revenue v. State Tax Appeal Bd., 613 P.2d at 693. Due to this disparity in manual valuations, STAB had applied a 34 percent across-the-board reduction to all commercial improvement appraisals in that case. This Court reversed on that issue concluding that the District Court lacked adequate evidence for any reduction without conjecture or speculation. The Court then set further criteria pursuant to which evidence of true and assessed values of commercial and residential property should conform:

“Workable criteria for concrete determination of discrepancy have been delineated by the Iowa Supreme Court:

“ ‘In order to obtain relief upon the ground that his property is assessed inequitably, it is essential that the taxpayer prove (1) that there are several other properties within a reasonable area similar and comparable to his; (2) the amount of the assessments on these properties; (3) the actual value of the comparable properties; (4) the actual value of his property; (5) the assessment complained of; (6) that by a comparison his property is assessed at a higher proportion of its actual value than the ratio existing between the assessed and actual valuations of the similar and comparable properties, thus creating discriminations.” Maxwell v. Shivers (1965), 257 Iowa 575, 133 N.W.2d 709, 711.’

“We would adopt these criteria as at least a starting place for actual comparison of true value to assessed value ratios. They, and other reasonable criteria that might be devised by the Department or the Board, should set the standard for proof in each case.” Department of Revenue v. State Tax Appeal Bd., 613 P.2d at 694-95.

STAB in Mr. DeVoe’s case considered the above criteria and found that he had presented no evidence to prove the market value of his prdperty; therefore, he failed to present sufficient proof to meet the criteria. As previously discussed, STAB abused its discretion by failing to consider the evidence presented by Mr. DeVoe. We do not reach a conclusion as to the sufficiency of the evidence in relationship to market value or true value. We hold that such evidence should be considered by STAB on remand as it makes an actual comparison of true value to assessed value ratios as discussed in Department of Revenue v. State Tax Appeal Bd.

Ill

Did STAB err by not reducing the value of Mr. DeVoe’s property by the same amount as it had other comparable properties?

The DOR argues that this issue was raised for the first time in this appeal. Mr. DeVoe claims that DOR’s position is contrary to the facts because STAB required DOR to produce evidence relative to this issue. We note that the parties seem to be arguing two different issues here. On remand, we direct that STAB consider the evidence on this issue and make appropriate findings and conclusions.

IV

Did STAB err by not considering the effect of a zoning change on one of Mr. DeVoe’s properties?

This Court, in Department of Revenue v. Grouse Mt. Development (Mont. 1985), [218 Mont. 353,] 707 P.2d 1113, 42 St.Rep. 1642, considered the effect of a public use restriction on the market value of golf course property:

“In construing R.C.W. 84.40.030, the Washington state equivalent to Section 15-8-111, MCA, the Washington Supreme Court stated that the market value of realty is to be measured by considering benefits to be garnered from the use of the property and the burdens placed upon it. Burdens are restrictions which may arise from zoning ordinances or other legal limitations on the use of land. Twin Lakes, 548 P.2d at 540. We hold that the public use restriction is a burden on the property that must be taken into consideration in determining the property’s market value under Section 15-8-111, MCA.”

Grouse Mt., 707 P.2d at 1116, relying upon Twin Lakes Golf and Country Club v. King County (Wash. 1976), 548 P.2d 538. The Washington court later explained its holding in Twin Lakes by stating, “Twin Lakes . . . clearly states that the bottom line is market value.” Sahalee Country Club v. Bd. of Tax App. (Wash. 1987), 735 P.2d 1320, 1322. Of course, pursuant to Section 15-8-111, MCA, market value is the bottom line in Montana as well.

The zoning ordinance referred to by Mr. DeVoe may be a burden upon his property if, as he alleges, it renders his a nonconforming use. That use may or may not adversely affect the market value of his apartment complex. STAB erred in failing to consider the effect of the zoning ordinance, if any, on market value and in failing to make findings on this issue. On remand STAB shall determine whether the ordinance does affect Mr. DeVoe’s property and shall also determine if the nonconforming use affects the market value of his property.

V

Did the District Court err by refusing to review the record or to consider the merits of Mr. DeVoe’s appeal from STAB?

An excellent discussion of the scope and standard of judicial review of a STAB decision is found in Grouse Mt., 707 P.2d at 1115:

“The District Court as a reviewing court may reverse or modify the decisions of the State Tax Appeal Board and remand the case for further proceedings if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are clearly erroneous in view of the reliable, probative and substantial evidence of the whole record or are arbitrary, capricious or characterized by an abuse of discretion. Section 2-4-704, MCA. This Court, however, has stated that it is not a judicial function to act as an authority on taxation matters. Tax appeal boards are particularly suited for settling disputes over the appropriate valuation of a given piece of property, and the judiciary cannot properly interfere with that function. Northwest Land v. State Tax Appeal Board (Mont. 1983), [203 Mont. 313,] 661 P.2d 44, 47, 40 St.Rep. 470, 473; Larson v. State (1975), 166 Mont. 449, 457, 534 P.2d 854, 858; Blair v. Potter (1957), 132 Mont. 176, 183, 315 P.2d 177, 180. Assessment formulations are within the expertise of the State Tax Appeal Board and we will uphold their decisions unless there is a clear showing of an abuse of discretion. Northwest Land, 661 P.2d at 47, 40 St.Rep. at 473.”

For the purpose of this case, we would add that pursuant to Section 2-4-704(2) (g), MCA, the court may reverse or modify the decision if substantial rights of the appellant have been prejudiced “because findings of fact, upon issues essential to the decision, were not made although requested.”

The District Court, in its December 8, 1987, order “sustained” STAB’s decision with respect to the appraised values of the commercial improvements for tax years 1980, 1981, 1982, and 1984. The court did so without any discussion or review of the record for sufficiency of evidence, saying only, “[T]his Court will not proceed to review the merits of this case.” This position was explained later in the order:

“It is not our function as a reviewing court to establish the terms of valuation to be utilized by STAB with respect to Petitioner’s property. We will not agree to order STAB to reciv [sic] the evidence requested by Petitioner nor will we order Respondent to submit the requested Realty Transfer Certificate information or other requested information pertaining to valuation.”

We are reversing the District Court’s decision to affirm STAB. For reasons discussed already, we are ordering the matter remanded to STAB. The District Court abused its discretion in refusing to review for error the record and decision by STAB.

Mr. DeVoe also had requested an order to DOR to produce realty transfer certificate (RTC) information upon which it based its comparable sales data. We hold the District Court’s refusal to order production of that information was erroneous, under our holding in O'Neill v. Department of Revenue (Mont. 1987), [227 Mont. 226,] 739 P.2d 456, 461, 44 St.Rep. 1037, 1043-44. Upon remand, the District Court shall issue a subpoena to compel DOR to release relevant RTC information, under the guidelines of O’Neill. Upon remand STAB shall consider any such information which is relevant to the issues before it.

We reverse the decision of the District Court as to tax years 1980, 1981, 1982, and 1984, and direct the court to remand the matter to STAB for proceedings in accord with this opinion. In view of the previous remand by the District Court in connection with tax year 1983, it appears that year may also be considered by STAB in the same remand proceedings.

We reverse the judgment of the District Court and remand to the District Court with instructions to issue the subpoena described above and to remand the proceeding to STAB as herein provided.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY, HUNT, GULBRANDSON and McDONOUGH concur.


author: THE HONORABLE GORDON R. BENNETT, District Judge, sitting for MR. JUSTICE GULBRANDSON MR. JUSTICE WEBER,

text:
    ROCKY L. WEBB, Plaintiff, v. MONTANA MASONRY CONSTRUCTION COMPANY, a Montana corporation, and Aldinger Construction Company, Inc., a Montana corporation, Defendants.
    No. 87-344.
    Submitted March 31, 1988.
    Decided Aug. 11, 1988.
    761 P.2d 343.
    Jarussi & Bishop, Gene R. Jarussi argued, Billings, for plaintiff.
    Jardine, Stephenson, Blewett & Weaver, Steven Potts argued, Great Falls, for defendants.
   THE HONORABLE GORDON R. BENNETT, District Judge, sitting for MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Honorable Paul G. Hatfield, United States District Judge for the District of Montana, has certified to this Court under Rule 44 of the Montana Rules of Appellate Procedure the following question:

“Where a general contractor is compelled, pursuant to Section 39-71-405(1), Montana Code Annotated, to pay workers’ compensation benefits to an employee of an uninsured subcontractor, is that general contractor’s liability limited, by Section 39-71-411, Montana Code Annotated, to compensation under the Workers’ Compensation Act?”

The statutes referred to provide:

“39-71-405. Liability of employer who contracts work out. (1) An employer who contracts with an independent contractor to have work performed of a kind which is a regular or a recurrent part of the work of the trade, business, occupation, or profession of such employer is liable for the payment of benefits under this chapter to the employees of the contractor if the contractor has not properly complied with the coverage requirements of the Workers’ Compensation Act. Any insurer who becomes liable for payment of benefits may recover the amount of benefits paid and to be paid and necessary expenses from the contractor primarily liable therein.

“39-71-411. Provisions of chapter exclusive remedy nonliability of insured employer. For all employments covered under the Workers’ Compensation Act or for which an election has been made for coverage under this chapter, the provisions of this chapter are exclusive. Except as provided in part 5 of this chapter for uninsured employers and except as otherwise provided in the Workers’ Compensation Act, an employer is not subject to any liability whatever for the death of or personal injury to an employee covered by the Workers’ Compensation Act or for any claims for contribution or indemnity asserted by a third person from whom damages are sought on account of such injuries or death. The Workers’ Compensation Act binds the employee himself, and in case of death binds his personal representative and all persons having any right or claim to compensation for his injury or death, as well as the employer and the servants and employees of such employer and those conducting his business during liquidation, bankruptcy, or insolvency.”

The following facts are stipulated:

“1. In 1985, Aldinger Construction, Inc. (hereinafter referred to as “Aldinger”), was the general contractor hired by the Bainville School District to remove an existing building and construct a new school building. Montana Masonry Construction Company (hereinafter referred to as “Montana Masonry”) was a subcontractor on the project. Rocky L. Webb (hereinafter referred to as “Webb”) was an employee of Montana Masonry.

“2. On or about September 11, 1985, Webb was injured in an accident which arose out of and in the course of his employment with Montana Masonry.

“3. By reason of the employer-employee relationship between Webb and Montana Masonry, Montana Masonry was required by Montana law to provide workers’ compensation insurance coverage for Webb. Montana Masonry failed to provide said coverage for the accident which occurred on or about September 11, 1985.

“4. On the date of the accident, Aldinger did carry workers’ compensation coverage through the State Compensation Insurance Fund.

“5. Since Montana Masonry had not properly complied with the coverage requirements of the Workers’ Compensation Act, the State Compensation Insurance Fund became liable for payment of benefits by reason of the provisions of Section 39-71-405(1), MCA.

“6. On or about December 22, 1986, Webb initiated the present action. Webb is seeking compensation for his injuries from Montana Masonry and Aldinger on the grounds that they failed to comply with the requirements of the Montana Scaffold Act and also failed to provide a safe place to work as provided by Section 50-71-201 et seq., MCA.

“7. As of the date of the Joint Motion, Montana Masonry has not been served with the lawsuit. However, Aldinger has been served and has filed an Answer denying liability. In addition, Aldinger has asserted in its Third Affirmative Defense that since it was required to and did pay compensation and medical benefits to Webb, an employee of Montana Masonry, pursuant to the provisions of the Workers’ Compensation Act, Aldinger is entitled to the insulation provided employers under the Workers’ Compensation Act, including those provisions of Section 39-71-411, MCA.”

Section 39-71-412, MCA, provides in pertinent part:

“The right to compensation ... is not affected by the fact that the injury ... is caused by the negligence of a third party other than the employer .... Whenever such event ... is caused by the act or omission of some persons or corporations other than his employer . . ., the employee,... in addition to the right to receive compensation under this chapter, [has] a right to prosecute any cause of action he may have for damages against such persons or corporations.”

The question here is whether Webb may maintain an action for negligence against Aldinger under the above statute and circumstances. We hold that he can, and that the answer to the question certified is, therefore, “no.”

The question upon which this answer turns is whether Aldinger becomes clothed with immunity under Section 39-71-411, MCA, by becoming liable under Section 39-71-405(1), MCA, due to the failure of Montana Masonry to provide coverage under the Workers’ Compensation Act. The question is not without difficulty or a considerable history.

The Act, originally passed in 1909 (Chapter 67, Laws of 1909), was found unconstitutional because it did not protect an employer who furnished compensation under it from being sued by the injured worker. Because no provision was made for reimbursement, in whole or in part, the Court found that the employer against whom an action was successfully prosecuted would be compelled to pay twice. The Court saw this as a violation of the employer’s right to equal protection of the laws. See, Cunningham v. Northwestern Improvement Co. (1911), 44 Mont. 180, 119 P. 554. The legislature tried again in 1915, providing specifically for immunity for any employer who elected to pay compensation under the Act (Section 3, Chapter 96, Laws of 1915). The new Act passed constitutional muster in Shea v. North-Butte Mining Co. (1919), 55 Mont. 523, 179 P. 499, wherein it was held the Act did not offend the Constitution by closing the courts to injured workmen who had chosen to become subject to the Act. Shea, 55 Mont. at 533-534, 179 P. at 503.

The question of an owner’s or general contractor’s reciprocal immunity arising from liability for a noncomplying subcontractor did not arise until after the 1965 legislature amended the definition of an independent contractor by adding:

“But the legal defense of independent contractor shall not bar otherwise compensable industrial accident claims against employers except when such defense is interposed on behalf of a party who has previously required the claimant’s immediate employer to come within the workman’s compensation act.”

Chapter 49, Laws of 1965, amending Section 92-438, R.C.M. 1947.

In Ashcraft v. Montana Power Co. (1971), 156 Mont. 368, 480 P.2d 812, this Court extended the legal defense to an industrial accident claim provided for in the amendment to Section 92-438, R.C.M. 1947, to immunity from any liability on the part of any employer who required a subcontractor to comply with the Act. The decision turned on a phrase borrowed from Wells v. Thill (1969), 153 Mont. 28, 32-33, 452 P.2d 1015, 1017, which was in turn borrowed from a Wisconsin independent contractor case: “In every such instance where the contractor is in full supervision and control of the work, he alone becomes liable to his employees under the statute for injuries sustained.” The Court, concluding that this sentence made the immunity of the employer of an independent contractor “axiomatic” under Section 92-438, R.C.M. 1947, stated that its holding was “strictly limited to circumstances in which the injured employee’s immediate employer is an independent contractor who is required to carry workmen’s compensation insurance by his general employer.” Ashcraft, 156 Mont. at 370, 480 P.2d at 813.

The term “statutory employer” was not mentioned in the Ashcraft majority opinion. But Justice Daly, dissenting, asserted the majority had created a statutory employer on the authority of Professor Arthur Larson’s Workmen's Compensation Law, Vol. 2A, Section 72.31. Subsection 72-31(a) of that work states:

“When subcontractor is not insured.

“Forty-four states now' have ‘statutory-employer’ or ‘contractor-under’ statutes — i.e., statutes which provide that the general contractor shall be liable for compensation to the employee of a subcontractor under him, usually when the subcontractor is uninsured but sometimes without reference to the insured status of the subcontractor, doing work which is part of the business, trade or occupation of the principal contractor. Since the general contractor is thereby, in effect, made the employer for the purposes of the compensation statute, it is obvious that he should enjoy the regular immunity of an employer from third-party suit when the facts are such that he could be made liable for compensation; and the great majority of cases have so held. This result is not affected by the fact that no compensation claim has been brought against the general contractor by the employee, or that compensation benefits were voluntarily paid by the general contractor. [Citations omitted.]”

In Buerkle v. Montana Power Company (1971), 157 Mont. 57, 59, 482 P.2d 564, 568, a case characterized by the Court as a “sequel” to Ashcraft, the plaintiff urged that the exception in Section 92-438, R.C.M. 1947, should be limited in effect to the Workmen’s Compensation Act and should not be a bar to third party liability suits grounded on the common law. In concluding otherwise, this Court observed: “The system of compensation under the Workmen’s Compensation Act does not envision benefits drawn from a single employer by a common law tort action together with liability from workmen’s compensation insurance.” In so holding, the Court cited the passage from Larson set forth above. Buerkle, 157 Mont. at 62, 482 P.2d at 566-567. It could be fairly said that the Buerkle case set this state firmly in the “statutory employer” column, granting immunity from common law tort action to all employers who were liable under the Workmen’s Compensation Act.

This quid pro quo concept was affirmed in First National Bank v. District Court (1973), 161 Mont. 127, 505 P.2d 408, a case in which immunity was clearly and specifically extended, under Section 92-438, R.C.M. 1947, to owners who required their independent contractors to provide workmen’s compensation coverage against claims of employees of their subcontractors. 161 Mont. at 133, 505 P.2d at 411. But the immunity did not stop there. The Court went on to accord the statutory employer immunity to the owner, even though it did not contractually require the injured employee’s immediate employer to carry workmen’s compensation, thus at least eroding one of the two requirements for application of the rule laid down in Ashcraft — i.e., that the employer require the independent contractor to be covered.

The accident in First National Bank, supra, occurred February 5, 1971, the case was submitted to this Court November 28, 1972, and decided January 9, 1973. On March 22, 1972, the 1972 Montana Constitutional Convention adopted the declaration of rights article (II) of our present Constitution, to be effective, prospectively, on July 1, 1973. Mont. Const. Cono., Vol. II, pp. 1104 and 1108. The Constitution was approved by the electorate on June 6, 1972. Section 16 of Article II of the Constitution provides:

“Section 16. The administration of justice. Courts of justice shall be open to every person, and speedy remedy afforded for every injury of person, property, or character. No person shall be deprived of this full legal redress for injury incurred in employment for which another person may be liable except as to fellow employees and his immediate employer who hired him if such immediate employer provides coverage under the Workmen’s Compensation Laws of this state. Rights and justice shall be administered without sale, denial, or delay.”

The president of the convention was Leo Graybill, Jr., of the law firm which represented the claimant in Wells v. Thill, supra, upon which, as noted, Ashcraft was based, and the Chairman of the Bill of Rights Committee, which formulated the Declaration of Rights article, was Wade J. Dahood of the law firm which represented the claimant in Ashcraft, supra.

The second sentence of Section 16 speaks loudly and clearly for itself. If there could be any question about what the members intended the sentence to mean, the question can be answered by reference to the transcript of the convention. Delegate Marshall Murray, a Kalispell attorney, moved, on behalf of a unanimous Bill of Rights Committee, for the adoption of Section 16, which amended the 1889 Constitution by adding the workmen’s compensation provision of the second sentence. In so doing, Delegate Murray announced:

“. . . The committee felt, in light of a recent interpretation of the Workmen’s Compensation law, that this remedy needed to be explicitly guaranteed to persons who may be employed by one covered by Workmen’s Compensation to work on the facilities of another. Under Montana law, as announced in the recent decision of Ashcraft versus Montana Power Company, the employee has no redress against third parties for injuries caused by them if his immediate employer is covered under the Workmen’s Compensation law. The committee feels that this violates the spirit of the guarantee of a speedy remedy for all injuries of person, property or character. It is this specific denial, and this one only, that the committee intends to alter with the following additional wording: ‘No person shall be deprived of his full legal redress for injury incurred in employment for which another person may be liable except as to fellow employees and his immediate employer who hired him if such immediate employer provides coverage under the Workmen’s Compensation laws of this state.’ In other words, the committee wants to insure that the Workmen’s Compensation laws of the state will be used for their original purpose — ,to provide compensation to injured workmen — rather than to deprive an injured worker of redress against negligent third parties, beyond his employer and fellow employees, because his immediate employer is covered by Workmen’s Compensation. The committee believes that clarifying this remedy would have a salutary eifect on the conscientiousness of persons who may contract out work to be done on their premises. To permit no remedy against third parties in cases where the employer is covered by Workmen’s Compensation is to encourage persons with rundown premises to contract out work without improving the quality of the premises. The committee urges that this is an abuse of the Workmen’s Compensation law and constitutes a misapplication of that law to protect persons who are negligent. The committee commends this provision to the Convention with the belief that it is an important, if technical, aspect of the administration of justice. Those are the remarks which are contained in the booklet. Let me amplify them by saying basically this: we felt that the right to third party action is a right which we should establish in our Constitution. It is a right which working men and women who are unfortunate enough to be injured have had for nearly 80 years in this state. We feel that it was wrongly taken away from these people by the Supreme Court decision which was mentioned. We feel that we perhaps are legislating in asking that this be written into our Constitution, but we of the committee really believe that we are acting in a judicial manner in asking that it be written in the Constitution for we feel that this Convention, perhaps, is the court of last resort for injured working men and women in Montana with respect to the third party lawsuit, and we recommend that the section be adopted.”

Mont. Const. Conv., Vol. V, pp. 1753-1754.

Delegate Otto Habedank, a Sidney attorney, moved for deletion of the provision and argued against it on the ground the same result could be obtained by legislation. The motion failed on a vote of 76 to 14, and the section was approved without a dissenting vote. Mont. Const. Cono., Vol. V, pp. 1754-1760. On this record, it must be concluded without equivocation that our 1972 Constitutional Convention determined that Professor Larson’s grant of immunity to statutory employers was to be excised from Montana law, root and branch, forever.

The legislative session immediately following the Constitutional Convention responded to the command of Article II, Section 16, of the new Constitution by reworking the Workers’ Compensation Act. It repealed in its entirety Section 92-438, R.C.M. 1947, the section around which this Court had structured its statutory employer immunity principle. See, Section 2, Chapter 251, Laws of 1973. It also enacted a new paragraph which has become Section 39-71-405(1), MCA (see current text above), which provided:

“Any employer who contracts to have work performed of a kind which is a regular or a recurrent part of the work of the trade, business, occupation or profession of such employer shall be liable for the payment of compensation to the employees of any subcontractor unless the subcontractor primarily liable for the payment of such compensation has coverage under this act. Any employers who shall become liable for such compensation may recover the amount of benefits paid and necessary expenses from the subcontractor primarily liable therein. [Emphasis added.]”

Section 1, Chapter 154, Laws of 1973 (second paragraph).

It is of particular interest to note that the legislature used, for the first time, the term “primarily liable”; that the “primarily liable” subcontractor was ultimately responsible for payment of benefits; and that an employer paying benefits on behalf of a noncovered subcontractor was entitled to look to the subcontractor for indemnification. In this way, it would seem, the legislature intended to avoid the double payment problems first encountered in Cunningham, supra, and to provide the employer with a means of avoiding loss because of a noncomplying contractor, but not to immunize a negligent employer from a third party action. The language of this subsection was altered by the 1979 legislature to accommodate specific reference to independent contractors, and to make it clear insurers, including, we suppose, self-insured employers, were entitled to recover benefits paid on behalf of primarily liable contractors, leaving unaltered the basic thrust of the section: the liability for payment of benefits stayed with the immediate employer, as did the immunity.

Clayton R. Fiscus was injured May 27, 1971, while working for a subcontractor of Beartooth Electric Co-operative, which had not required the subcontractor to carry workmen’s compensation. The proceedings, in Fiscus v. Beartooth Electric (1974), 164 Mont. 319, 522 P.2d 87, were therefore not affected by the 1972 Constitution or the 1973 enactments pursuant thereto, even though the case was submitted and decided after the effective date of both. See, Poulson v. Walsh-Groves (1975), 166 Mont. 163, 531 P.2d 1335. Characterizing it as a “step-out” from Ashcraft and Buerkle, this Court held the employer enjoyed immunity even though it had not required the subcontractor to carry workmen’s compensation insurance and even though the subcontractor had not only had insurance but had paid the claimant from it. The latter feature was the new one in the case because the Court had already decided in the First National Bank extension of the Ashcraft case that the employer enjoyed immunity even though it had not contractually required its subcontractor to insure. As to this new feature, it was concluded that immunity was justified in the case where the owner or employer did not require the subcontractor to be insured because the owner or contractor was subject to liability as the statutory employer in the event the subcontractor did not maintain workers’ compensation coverage. The fact that the subcontractor had, in the Fiscus case, actually maintained the coverage, even though not required to do so by the owner, was of no moment because the potential for liability on the part of the owner was present. Fiscus, 164 Mont. at 326, 522 P.2d at 90. This Court unanimously overruled the Fiscus “step out” in Piper v. Lockwood Water Users Assn. (1978), 175 Mont. 242, 573 P.2d 646.

With this history in mind, we consider the arguments presented.

Aldinger’s initial and central argument is that it is entitled to immunity as Webb’s statutory employer. Its principal reliance is on the 1972 case of Kelleher v. State (1972), 160 Mont. 365, 503 P.2d 29, in which Justice Daly, writing for the majority, adopted Professor Larson’s statutory employer concept and concluded: “. . . the rationale of the statutory employer-employee extension by the legislature is for the benefit of the employee and that such a benefit conferring a liability on the employer is co-existent with immunity from common law liability.” 160 Mont. at 369-370, 503 P.2d at 31. Kelleher, of course, followed Ashcraft in both time and legal principle. Reliance on it in this case is defective for at least three reasons, as heretofore noted. First, the statute upon which the statutory employer concept was enacted for Montana (Section 92-438, R.C.M. 1947) has been repealed. Second, the Ashcraft holding was expressly and specifically overruled by the people of the state with their approval of Article II, Section 16, of the 1972 Constitution, in which they directed that immunity would be restricted to an “immediate employer who hired” the workmen and who had provided coverage. Third, the 1973 Montana legislature implemented the new constitutional provision by amending Section 39-71-405, MCA, to provide that employers such as Aldinger who were required to pay, as self-insurers or through their insurance, compensation on behalf of a “primarily liable” contractor could recover the payment from such an employer. If the immediate or primary employer who hired the worker is ultimately responsible for payment of workmen’s compensation, the whole quid pro quo rationale underlying the statutory employer concept disappears, which was clearly what the legislature intended.

Aldinger’s other arguments are, for the most part, variations on the statutory employer theme. It contends the Workers’ Compensation Act provides an exclusive remedy for the employee as well as the employer. That undoubtedly is what Section 39-71-411, MCA, provides: it binds the employee to the extent the Act applies. The Act, however, also specifically preserves the employee’s common law right to sue third parties, other than his employer or a fellow employee, for his injuries. Section 39-71-412, MCA. In this case, the question comes down again to whether Aldinger is an immunized employer, and we hold it is not.

The argument is made that granting immunity to Aldinger is in conformity with the first sentence of Article II, Section 16, of the 1972 Constitution, because its payment of workers’ compensation to Webb provides him a “speedy remedy.” This sort of sophistry is hardly worth consideration when one places the phrase back into its context. A “speedy remedy” is afforded by the Constitution to every person for every injury of person, property or character. The fact that workers’ compensation must be paid in a relatively speedy manner, ultimately by the immediate employer, is no justification for cutting off legitimate third party remedies. Aldinger argues that preserving Webb’s right to bring a third party suit against it gives Webb a double remedy. A passing perusal of the subrogation statute, Section 39-71-414, MCA, explodes this theory.

Aldinger summons Washington Metropolitan Area Transportation Authority v. Johnson (1984), 467 U.S. 925, 104 S.Ct. 2827, 81 L.Ed.2d 768, in aid of its cause. In this case, the United States Supreme Court concluded the Authority was entitled to immunity from tort actions brought by employees of its contractors because under the operative statute (Longshoremen’s and Harbor Workers’ Compensation Act, 33 USC 940(a)), the Authority was required to obtain workers’ compensation coverage for all of the employees of its contractors which failed to obtain such coverage. The Authority was therefore found to be ultimately liable for the coverage of all employees of its contractors and subcontractors. As we have pointed out, that is not the case under the law in Montana, where the immediate employer is ultimately liable and where there is no requirement that the contractor carry compensation insurance if its subcontractor does not. The cases from other states relied upon by Aldinger are likewise readily distinguishable on the basis of differences in the statutes construed.

On the other hand, Loffon v. Bell and Zoller Coal Co. (1977), 65 Ill.2d 437, 3 Ill.Dec. 715, 359 N.E.2d 125, deals with a statute which, like Montana’s, permitted recovery by the paying contractor from the noncomplying subcontractor. The Court met the fundamental argument made here in the following discussion:

“The defendants argue that a construction of Section 5(a) adverse to their position would result in a violation of their rights to due process and equal protection. They premise this contention on the basis that they are liable to pay compensation benefits without fault under Section 1(a)(3) and still remain subject to a subsequent common law or statutory action for damages. We find this argument to be without merit, for under this construction of Section 5(a) defendants are placed in no worse position than they are in regard to suits by employees of insured subcontractors. The only difference between the two situations is that in one case the general contractor has paid compensation. He, however, has the right of indemnification against the uninsured subcontractor. If the subcontractor is insolvent, the general contractor who is found liable based upon a common law or statutory cause of action may set off from that award the amount of compensation benefits he has previously paid to the employee. The employee receives no windfall or double recovery. In some cases, where the subcontractor is insolvent and the general contractor prevails in the common law or statutory action, the general contractor must bear the burden of the compensation payments. It must be noted, however, that the general contractor had it within his power to protect himself from this loss by hiring insured subcontractors.”

Loffon, 3 Ill.Dec. at 720, 359 N.E.2d at 130.

The declaration made in the second sentence of Article II, Section 16, together with its legislative implementation in Section 39-71-405, MCA, would seem to be so clear that it not only needs no interpretation, it prohibits it. If, however, some doubt may somehow be cast on the constitutional and legislative intent, any interpretation of that intent must be in favor of the claimant. It is stipulated the accident involved here occurred September 11, 1985. At that time, Section 39-71-104, MCA, provided: “Whenever this chapter or any part or section thereof is interpreted by a court, it shall be liberally construed by such court.” The decisions of this Court had long since established that this provision required liberal construction in favor of the claimant. See, e.g., Cordier v. Stetson-Ross, Inc. (1979), 184 Mont. 502, 604 P.2d 86. While this section was repealed by the 1987 legislature (Section 68, Chapter 464, Laws of 1987), it was substantive in nature and must therefore be applied as it existed at the time the claimant’s right accrued, i.e.: on the date of the accident.

Aldinger invites this Court to overrule its holdings in White v. State (1983), 203 Mont. 363, 661 P.2d 1272, and Pfost v. State (Mont. 1985), [219 Mont. 206,] 713 P.2d 495, 42 St.Rep. 1957, to advance its theory that the first sentence of Article II, Section 16, of the 1972 Constitution (“Courts of justice shall be open to every person, and speedy remedy afforded for every injury of person, property, or character.”), does not represent a fundamental right and should therefore somehow be less seriously regarded. It concedes, however, that the right expressed goes back to Magna Charta, and it would be difficult to argue that it does not express a common law right. Common law rights are extinguished only upon strict construction. Madison v. Pierce (1970), 156 Mont. 209, 478 P.2d 860. To deprive Webb of his right to bring an action against Aldinger on Professor Larson’s equitable theory that anyone who pays or is subjéct to paying workers’ compensation, whether the payment can be recovered or not, is entitled to immunity would be a most liberal construction of a clear and long established constitutional imperative.

If we by judicial fiat defy the clearly stated intention of both the 1972 Constitutional Convention and the 1973 legislature and once more raise the ghost of Ashcraft by immunizing owners and contractors from liability for their negligence because they had paid or are subject to paying compensation for their noncomplying contractors or subcontractors, we will be rewarding them for not requiring the immediate employers of injured working men to comply with the spirit as well as the letter of the Act, and we will be ignoring the fact that they may recover the payments made from the offending employers, thus acquiring the immunity free. This would be a patent perversion of a law that was conceived, enacted and is supposed to be implemented primarily to provide aid and relief to injured working men and women.

For all of the above reasons, we hold the answer to the question certified must be “No,” and the United States District Court is so advised.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY, McDONOUGH and HUNT concur.

MR. JUSTICE WEBER,

specially concurring:

In Ashcraft, the Court extended to Montana Power Company immunity from tort liability in the workers’ compensation setting. The framers of the 1972 Constitution expressly overruled Ashcraft by providing immunity only to immediate employers who provide workers’ compensation coverage. Unlike the majority, I do not believe that Article II, Section 16, contemplated Aldinger’s position, which is distinguishable from Montana Power Company’s position in Ashcraft.

In Ashcraft, the employee received workers’ compensation from Swain & Morris, the subcontractor of Montana Power. Under the quid pro quo theory which underlies the workers’ compensation law, Swain & Morris had immunity from tort liability as the employer which furnished workers compensation. Ashcraft held that Montana Power, the employer of Swain & Morris, also had immunity from tort liability. At that point Montana Power had furnished nothing in return for the freedom from tort liability.

In contrast, Montana Masonry, as Webb’s immediate employer, failed to carry workers’ compensation insurance. As a result of that failure, Aldinger, the employer which had hired Montana Masonry as a subcontractor, was required to furnish and did furnish workers’ compensation coverage to Mr. Webb. Following the quid pro quo theory, Montana Masonry under our statutes will not be granted immunity from tort liability because of its failure to furnish workers’ compensation coverage. Under the theory of the majority, Aldinger is also denied immunity from tort liability even though Aldinger actually furnished the workers’ compensation coverage which protected and paid the employee.

The majority states that the 1973 Legislature implemented the new Constitution by enacting Section 39-71-405(1), MCA, to hold the subcontractor primarily liable. The majority does not mention that the 1973 enactment was amended in 1979. I do not conclude that a 1973 enactment to workers’ compensation law which was subsequently amended is determinative.

I agree that the clear wording of Article II, Section 16 of the Montana Constitution, is determinative of the present case, because I find no legislative indication of an intent to grant immunity from tort liability to employers such as Aldinger. I find no statute which suggests that Aldinger should be considered as the equivalent of the “immediate employer who hired him” as provided in Article II, Section 16. Although I do not agree that the Constitution’s framers had this situation in mind, in view of the clear wording of the constitutional provision, I have to agree that Aldinger’s liability for workers’ compensation to Mr. Webb has not given it immunity from tort liability. Contrary to the argument of the majority, I reach that conclusion because I can find nothing in the statutes to persuade me that the legislature has actually considered the problem of Aldinger.

The majority reaches the conclusion that to deprive Mr. Webb of his right to bring an action against Aldinger on Professor Larson’s equitable theory — that anyone who pays or is subject to paying workers’ compensation is entitled to immunity, whether the payment can be recovered or not — would be a most liberal construction of a constitutional imperative. I do not agree with that broad conclusion. It reminds me of the arguments made in Shea v. North-Butte Min. Co., (1919), 55 Mont. 522, 179 P. 499, when the worker questioned the constitutionality of the Workmen’s Compensation Act. In that case the Court stated as follows with regard to the purpose of workmen’s compensation:

“It is sufficient ... to call to mind that the object sought was to substitute for the imperfect and economically wasteful common-law system by private action by the injured employee for damages for negligent fault . . . which, while attended with great delay and waste, compensated those employees only who were able to establish the proximate connection between the fault and the injury, a system by which every employee in a hazardous industry might receive compensation for any injury suffered by him . . . whether the employer should be at fault or not ...”

Shea, 179 P. at 501. In that case this Court concluded that there were appropriate benefits to both the employer and employee to uphold the Act as constitutional, applying a quid pro quo theory. Under that theory, it may be that the Montana Legislature could enact legislation granting an equivalent benefit to Aldinger as the employer which furnished compensation.

Without taking a position as to whether the legislature has the power to do so under the Constitution, I do invite the legislature to carefully consider this question. It certainly may be argued that as a matter of fairness, Aldinger is entitled to immunity from tort liability in exchange for providing workers’ compensation. Consideration of that question will require careful analysis of the provisions of Article II, Section 16 of the Montana Constitution.

I concur in the result of the majority opinion.

FOOTNOTE

      . The question in the case cited (Potter v. City of Kenosha (1955), 268 Wis. 361, 68 N.W.2d 4) was whether the city, as owner of the streets, was liable under Wisconsin’s “safe place statute” for the injury of an independent contractor’s employee because it permitted the contractor to work in a trench in the street without shoring it as was required by the safety code. The court concluded the contractor was liable because he was independent and that the city was not liable because it had contracted for a sewer, not a trench, and therefore had no control over the trench. The case had nothing to do with workmen’s compensation, as such.