Opinion
No. 73-001 No. 73-002
Decided October 2, 1973. Rehearing denied November 13, 1973. Certiorari denied (Swales and Clark) January 14, 1974. Certiorari granted (Breckenridge and Division) January 14, 1974.
Industrial Commission order established the workmen's compensation liability of various companies involved in construction project at which claimants sustained work-related injuries. Two companies sought review and the claimants cross-appealed.
Affirmed in Part, Reversed in Part.
1. WORKERS' COMPENSATION — Statute — Impose Liability — Person Contracting Out — Uninsured Contractor — Correctly Dismissed — Compensation Proceedings. By the provisions of the statute, the employment of workmen's compensation claimants by an uninsured contractor operated to impose liability for workmen's compensation on the person contracting out the work of its business; accordingly, the Industrial Commission correctly dismissed the uninsured contractor from the workmen's compensation proceedings.
2. Evidence Demonstrated — Joint Venture Contract — Superseded — No Work Done — No Liability — Claimant's Benefits — Should Have Been Dismissed. Where there was no evidence that joint venture entered into any contract for the construction of building where workmen's compensation claimants were injured, and where it was established that its contract regarding sale and development of the land was superseded by a contract between the landowner and another party, and where it was shown that no work was performed under the joint venture's contract with the landowner, the joint venture had no liability for workmen's compensation benefits to claimants and should have been dismissed from such proceedings.
3. Court of Appeals — Not Bound — Industrial Commission's Interpretation — Written Land Development Contracts. The Court of Appeals is not bound by Industrial Commission's interpretation of two written land development contracts entered by certain of the respondents in workmen's compensation proceedings.
4. CONTRACTS — Parties — May Agree — Written Contract — Take Effect — Earlier Than Executed. The parties may agree that a written contract shall take effect at an earlier date than that on which it was executed; and accordingly, under the evidence and testimony presented, contract that was executed on November 23 and 24, 1971, was effective as of its stated date of August 23, 1971.
5. WORKERS' COMPENSATION — Evidence Demonstrated — Joint Venture — Participant in Project — Claimants Injured — Dismissed From Proceedings — Error. Where evidence in the record shows that joint venture solicited bids, worked out cost figures, and arranged financing for construction project, and where construction contract with contractor was executed by the joint venture on October 11, 1971, and undisputed testimony indicated that work commenced the following week, the joint venture was a participant in the project at the time of workmen's compensation claimants' injuries in November of 1971, and thus it should not have been dismissed from the workmen's compensation proceedings.
6. Owner of Land — Not — Merely Sell Land — Jointly Participating — Development — Jointly and Severally Liable — Injured Claimants' Benefits. Under terms of agreement entered between owner of land and joint venture, owner of land did not merely contract to sell the land, but rather was jointly participating in the construction project on the land as of the date that workmen's compensation claimants were injured; thus, it was jointly and severally liable with the joint venture for claimants' workmen's compensation benefits.
Review of Order from the Industrial Commission of the State of Colorado
Rockett, Bury and Ferguson, Robert S. Ferguson, for petitioners Breckenridge Company and Division of State Compensation Insurance Fund.
Weller, Friedrich, Hickisch and Hazlitt, Geoffrey S. Race, for respondents and cross-petitioners Swales Management Corporation and Security Insurance Company of Hartford.
Brenman, Sobol Baum, Arthur L. Fine, for respondents, cross-petitioners, and cross-respondents Danny Beyers and Don Lowe.
Hindry Meyer, Leonard V. Carlin, for cross-respondents Donald G. Swales and William E. Clark.
John P. Moore, Attorney General, John E. Bush, Deputy, Peter L. Dye, Assistant, for respondents, cross-petitioners, and cross-respondent Industrial Commission of Colorado.
Harry M. Sterling, for cross-respondents Harold Stafford and James Coull, d/b/a Stafford-Coull Associates.
This review of an Industrial Commission order places at issue the workmen's compensation liability of the various companies involved in a construction project at which claimants sustained work-related injuries.
The Breckenridge Company is a land development company engaged in selling land to purchasers who agree to construct and operate various businesses in accordance with an overall master plan for the property. It entered into a contract to sell land to Swales Management Corp. (SMC), which company was to construct a theater and convention meeting center on the land, ultimately to be owned by SMC. When SMC could not obtain the necessary financing to proceed with the contract, Donald G. Swales and William E. Clark, officers in SMC, formed a joint venture, Fanny Placer Venture, and entered into a contract with Breckenridge Co. which was similar to the Breckenridge contract with SMC. Fanny Placer Venture then contracted with Stafford-Iles-Coull Construction Co. (Stafford-Coull Associates) to do the actual construction.
During the construction, claimants-respondents, Beyers and Lowe, were injured while working in the course of their employment for Stafford-Coull Associates. Stafford-Coull Associates did not carry workmen's compensation insurance. Upon workmen's compensation claims being filed for these injuries, the referee determined that Breckenridge Co. and SMC were engaged in a joint venture for their mutual benefit in the construction of the theater building and were each jointly and severally liable. It dismissed Stafford-Coull Associates and Fanny Placer Venture and their principals from the proceedings. The Industrial Commission affirmed the referee's decision and Breckenridge Co. and SMC appeal, each contending that it is not liable. The injured workmen filed a cross-appeal against Stafford-Coull Associates and Fanny Placer Venture and their principals, contending that if for any reason Breckenridge Co. and SMC were not liable, then the cross-respondents would be liable.
Liability of Stafford-Coull
[1] By the provisions of C.R.S. 1963, 81-9-1, the employment of claimants by an uninsured contractor operated to impose liability for compensation on the person contracting out the work of its business. See Hartford Accident Indemnity Co. v. Clifton, 117 Colo. 547, 190 P.2d 909. Accordingly, the Commission correctly dismissed Harold Stafford and James Coull, d/b/a Stafford-Coull Associates, from this proceeding.
Liability of SMC
[2] SMC should have been dismissed from the proceedings. There is no evidence in the record to indicate that SMC entered into a contract with anyone for the construction of the building or incurred any expense in relation thereto. It was clearly established that the Breckenridge-SMC contract was superseded by the Breckenridge-Fanny Placer Venture contract and that no work was ever performed under the SMC contract. Accordingly, the evidence does not support the finding of the Industrial Commission that work at the time of the accident was being done by, for, or at the direction of SMC, and therefore the finding by the Commission that SMC was part of a joint venture and liable under C.R.S. 1963, 81-9-1, is erroneous. Thus, SMC had no liability for the workmen's compensation benefits at issue, and it should have been dismissed from the proceeding.
Liability of Fanny Placer Venture
The Commission dismissed Donald Swales and William Clark, d/b/a Fanny Placer Venture, from the proceedings on the ground that they were not involved in the construction project on November 9, 1971, when claimants were injured. The Commission found:
"This joint venture [Breckenridge and SMC] contracted out the work of constructing the theater to Stafford-Coull and Associates who were not insured under the workmen's compensation laws at the time of the accident . . . . "
This finding was erroneous because it was based upon an erroneous interpretation of the contracts between the parties.
The difficulty here stems from the fact that Breckenridge entered into two similar contracts with two different legal entities. Breckenridge first entered into a purchase agreement, dated August 23, 1971, with SMC. However, SMC could not arrange financing for the project, and Swales and Clark formed a joint venture, Fanny Placer Venture, to carry out the project. The joint venture and Breckenridge entered into a contract which specifically stated that it superseded the prior contract. The second contract was dated August 23, 1971, but it was not executed until November 23 and 24, 1971. According to the testimony of Mr. Clark, the Fanny Placer Venture contract was operational prior to the date of the accident, November 9, 1971.
[3,4] Although the Commission found there was a legal binding relationship between SMC and Breckenridge until the Fanny Placer Venture contract was executed on November 23 and 24, 1971, this court is not bound by the Commission's interpretation of the two contracts. Meier v. Denver U.S. Nat'l Bank, 164 Colo. 25, 431 P.2d 1019. The parties may agree that a written contract shall take effect at an earlier date than that on which it was executed. Brewer v. National Surety Corp., 169 F.2d 926; Thornton Bros., Inc. v. Gore, 252 Miss. 27, 172 So.2d 425. Thus, we hold that the Fanny Placer Venture contract was effective as of its stated date, August 23, 1971. That contract superseded the SMC contract, and its effect was to substitute Fanny Placer Venture for SMC.
[5] There is evidence in the record that Fanny Placer Venture solicited bids, worked out cost figures, and arranged financing for the construction project. The construction contract with Stafford-Coull Associates was executed by Fanny Placer Venture on October 11, 1971, and the undisputed testimony is that work commenced during the following week.
Accordingly, we conclude that Fanny Placer Venture, rather than SMC, was a participant in the construction project at the time of claimants' injuries, and thus should not have been dismissed from the proceeding.
Liability of Breckenridge Co.
[6] Breckenridge contends that it could not be liable under the provisions of C.R.S. 1963, 81-9-2(1), relative to contracting out work because it merely entered into a contract to sell certain real estate. However, in the agreement for the sale, purchase, and development of the real estate, the possession of Fanny Placer Venture was non-exclusive, except to the extent necessary to restrict access during construction. Breckenridge Co. reserved the right to have submitted to it for its approval all agreements between Fanny Placer Venture and third persons pertaining to the construction and financing of the buildings. It reserved the right to approve or reject plans and specifications. It placed supervisory personnel in the field, and, after the contract was fully negotiated, it changed the grade elevations for the construction at a cost to Fanny Placer Venture of $10,000. Further, the contract provided that if Fanny Placer Venture should default in the performance of the agreement, Breckenridge Co. could demand specific performance or could repurchase the property at its option. Under these circumstances, Breckenridge and Fanny Placer Venture were jointly participating in the theater project as of the date of the accident. Each member of the joint venture is jointly and severally liable for claimants' workmen's compensation benefits. D.E. Jones Construction Co. v. Heirs of Jones, 29 Colo. App. 482, 487 P.2d 822.
The order of the Commission dismissing Harold Stafford and James Coull, d/b/a Stafford-Coull Associates, is affirmed; the order declaring Swales Management Corporation liable as a joint venturer with Breckenridge Company is reversed with directions to dismiss SMC from this proceeding; the order dismissing Donald G. Swales and William E. Clark, d/b/a Fanny Placer Venture, is reversed and the cause remanded with directions to the Commission to modify its order so as to declare Breckenridge jointly and severally liable with Donald G. Swales and William E. Clark, d/b/a Fanny Placer Venture, instead of with SMC.
CHIEF JUDGE SILVERSTEIN and JUDGE PIERCE concur.