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District Court of Appeal, First District, Division 2, California.


Civ. 12113.

Decided: May 28, 1942

Pillsbury, Madison & Sutro, of San Francisco, for petitioner. Everett A. Corten and Dan Murphy, both of San Francisco, for respondents.

Petitioner seeks the annulment of an award made by the respondent commission in favor of John Turkovich and against petitioner.

Petitioner denied liability upon the ground that Turkovich was the buyer of timber under a conditional sales contract and was not an employee of petitioner. The commission found that “At the time of aforesaid injury, applicant was working for Pacific Lumber Company under the terms of a ‘Conditional Sales Agreement’. The terms of said ‘Conditional Sales Agreement’ are not sufficient to constitute applicant an independent operator or independent contractor at the time of said injury.” The commission therefore found that Turkovich was an employee of petitioner and made an award in his favor.

Under the findings of the commission, the question presented in this proceeding appears to be merely one of law, to–wit: What was the relationship established by the written “Conditional Sales Agreement”? It is appropriate, however, to state certain facts before proceeding to a discussion of said agreement.

Turkovich was a “tie–maker” by occupation. Tie–makers engage in felling trees, cutting them into logs and splitting the logs into ties, fence posts, grape stakes and other so–called split products. It appears that in Humboldt County, where the accident occurred, such tie–makers commonly work either as employees or as independent contractors, manufacturing such products for the owner at a specified rate, or as purchasers, buying the standing and fallen timber from the owners at a specified rate and manufacturing such products for their own account.

Prior to 1937, tie–makers working on petitioner's premises were considered independent contractors manufacturing such products for petitioner at piece rates. In that year, petitioner sought to change the relationship to that of employees and these tie–makers obtained the benefits and accepted the burdens of that relationship. Thereafter petitioner found that it was impracticable to continue that relationship. The tie–makers ordinarily carried on their operations in various isolated portions of the petitioner's properties which could not be logged in petitioner's normal operations. Difficulty was encountered in supervising the work, checking the time and in other matters. Petitioner found itself in the position of having to abandon these operations or of making some different arrangement with the tie–makers. It therefore determined to adopt the arrangement of selling certain standing and fallen timber to the tie–makers under agreements exemplified by the conditional sales contract involved in this case.

Turkovich had completed his operations under two of said agreements prior to the time that he entered into the particular agreement under which he was operating at the time he was injured. At the time of signing each of said agreements, a copy thereof was furnished to him. It appears that said agreements were of the type generally used in Humboldt County by owners in selling timber to tie–makers.

The conditional sales agreement in question was dated March 18, 1941, and designated petitioner as “seller” and Turkovich as “buyer.” It recited the ownership of certain described land by the seller with standing or down redwood timber thereon consisting of isolated trees or groups of trees and the marking and numbering of eight of said trees for identification for the purpose of said agreement. It further recited the desire of the buyer to purchase said eight trees for the purpose of cutting the same into redwood split products “for resale by buyer” and the willingness of the seller to sell the same. The seller agreed to sell said eight trees to the buyer “for the price of Seven & 50/100 ($7.50) per thousand board feet on the basis of board measure content of such timber suitable for manufacture by Buyer of such redwood split products (the decision of Seller's representative as to such suitability and measure to be conclusive on both parties hereto.)” Seller granted to the buyer a license for ingress and egress and occupancy of the property for the purpose of cutting said trees and manufacturing said products. The agreement was conditioned upon the buyer beginning to cut on or before March 18, 1941, and completing the cutting, manufacturing and removal from the premises of the redwood split products not later than June 30, 1941. All operations were to be at the sole cost and expense of the buyer; the seller was under no obligation to furnish tools or appliances. Payments by the buyer were to be made to the seller on the 1st and 16th of each month or at such other times as might be mutually agreed upon. The buyer agreed to take all necessary precautions for the prevention of fire; to comply with all laws; to abstain from any wasteful or destructive practices; to permit seller's inspectors at reasonable times to determine whether buyer's operations were wasteful or destructive; and to hold the seller harmless from any liability for damage to property or persons resulting from the buyer's operations. The agreement was not to be “assignable by the Buyer without the consent of the Seller.” Title to the trees and split products was to remain in the seller until full payment at the rate specified, except that the buyer was given the right to have title vested in him of portions thereof not less than 1,000 feet, board measure, upon payment of the purchase price of such portions. The entire purchase price was to be paid not later than June 30, 1941. The agreement made time of the essence and other provisions were contained therein similar to those frequently found in conditional sales contracts.

It thus appears that said agreement constituted an ordinary contract for the conditional sale of “goods” as the term “goods” is defined in section 1796 of the Civil Code. It appears equally clear that said contract was devoid of any of the elements necessary to establish the relationship of employer and employee between the parties. We find nothing ambiguous or uncertain in its provisions. Under its terms, Turkovich was essentially a buyer engaging in independent operations consisting of converting specified timber, purchased by him from petitioner, into split products with his own tools and upon his own time and for his own account. There is not a single provision in said agreement indicating that petitioner retained any authoritative control over any of said operations or that petitioner retained any other right ordinarily retained by any employer. Turkovich could come and go at any time that suited his convenience, subject only to losing certain rights if his operations were not completed by June 30, 1941. While the contract was not assignable by Turkovich, he could do the work himself or employ others to do it for him. He could sell his manufactured products to anyone and at any price which he could obtain. We therefore conclude that the finding that the parties were operating under said agreement at the time Turkovich was injured is wholly inconsistent and irreconcilable with the finding that he was an employee of petitioner.

The respondent commission makes no attempt to meet the issue thus presented. It states in its answer that the sole question is whether there was any evidence to support the finding that Turkovich was an employee of petitioner at the time of his injury. In other words, the commission now impliedly repudiates its finding that the parties were operating under the unambiguous conditional sales agreement and now takes the position that there was some evidence tending to show that the parties were in fact operating under some other agreement which established the relationship of employer and employee. This position is in line with the claim made by Turkovich before the commission to the effect that the conditional sales agreement was a mere subterfuge and that it was not the true agreement under which the parties were operating. But, as above indicated, the commission found against this claim made by Turkovich and there was abundant evidence to sustain said finding. It would serve no useful purpose to set forth such evidence in view of the finding of the commission but it may be stated in this connection that our review of the record leads us to the conclusion that there was no substantial evidence to support a finding that Turkovich was operating under any other agreement establishing the relationship of employer and employee. See Parsons v. Industrial Accident Commission, 178 Cal. 394, 173 P. 585; Provensano v. Division of Industrial Accident and Safety, 110 Cal.App. 239, 294 P. 71; Bohanon v. James McClatchy Pub. Co., 16 Cal.App.2d 188, 60 P.2d 510; State Compensation Insurance Fund v. Industrial Accident Commission, 216 Cal. 351, 14 P.2d 306.

The respondent commission cites and relies upon S. A. Gerrard Co. v. Industrial Accident Commission, 17 Cal.2d 411, 110 P.2d 377, and Carlson v. Industrial Accident Commission, 213 Cal. 287, 2 P.2d 151, but these authorities may be readily distinguished. In the Gerrard case, the court reviewed the contracts and determined that said contracts gave the alleged employer the right to exercise “complete or authoritative control.” On page 414 of 17 Cal.2d, 110 P.2d on page 378, it was said “Under Hanaoka's contracts with the Gerrard Company, he had no right to do anything with the melon crop, from planting to sale, without its consent.” In the Carlson case, the agreement was drawn by the parties themselves without legal advice and it was a most unusual one. It resembled a lease but it expressly provided that all work should be done “under the supervision” of the alleged employer and “in strict accordance with her wishes, ideas, and instructions.” 213 Cal. at page 291, 2 P.2d at page 153. It further provided that the crops should be delivered at the shipping house “for the account of and in the name of” the alleged employer. On page 294 of 213 Cal., 2 P.2d on page 154, the court said that the alleged employer could not “reserve in a so–called lease the rights of an employer without becoming liable as one.” In the present case, no comparable rights were reserved in the agreement under which the commission found that the parties were operating.

The award is annulled.

SPENCE, Justice.

NOURSE, P. J., and STURTEVANT, J., concurred.