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Emma v. Norris

DECEMBER 3, 1970.




APPEAL from the Circuit Court of Kane County; the Hon. J. SEIDENFELD, Judge, presiding.


Philip Emma brought a common-law action against the defendants alleging personal injuries resulting from an accident which occurred on June 26th, 1966 in the elevator of the hotel owned by defendant Delora Norris and managed by defendant Innkeepers, Inc. In one of the alternative counts plaintiff alleged he was an employee of Norris and in the other alleged that he was an employee of Innkeepers. Both of these defendants filed motions for summary judgment. Plaintiff appeals from a judgment for these defendants, which was based on findings that Norris was the loaning employer and Innkeepers the borrowing employer within the terms of Ill. Rev. Stat. 1965, ch. 48, par. 138.1(a)4. The court concluded that therefore both defendants were plaintiff's employers, thus precluding common law proceedings against either of them.

The controlling facts are included in the pleadings, attached depositions and affidavits. Emma was a full time employee of the Illinois Youth Commission who worked as a part-time bartender at the Baker Hotel in 1957. At all times in question plaintiff was solely on the payroll of the Baker Hotel.

In 1962 Innkeepers entered into an agreement with Norris which confirmed and incorporated by reference a previous proposal that Innkeepers would manage the hotel for an annual fee. The agreement described the Hotel Baker as the "principal" and Innkeepers as the "agent" to perform managerial services described in the proposal. These included provisions that Innkeepers would engage and pay out of its fee a full time manager who would "interview and select a full staff of experienced supervisory employees — chefs, housekeepers, front office, etc. — and provide for the thorough training of the entire staff"; that Innkeepers would guide the individual inn manager through a "constant close-scrutiny supervision"; that it would offer the owner the benefit of its advice and counsel on matters of policy, conduct a continuing program of research into improvements and give the owner daily reports on the details of operation, as well as monthly interpretations of trends and prospects. The agreement further provided that Innkeepers would use its best efforts in the management of the establishment but that it was understood that it did not guarantee either that there would be profits or that there would not be losses. It also stated that,

"Innkeepers, Inc. assumes no responsibility for the defalcations of employees nor for injuries to persons or property arising out of or in connection with the operation of the establishment".

(In 1964 this portion of the agreement was amended to add the language "Except as to the resident manager for whom it does assume full responsibility". The president of Innkeepers deposed that this provision was the result of a conversation with Norris's representatives which disclosed that in the hotel's bonding insurance the manager wasn't covered and that as a result Innkeepers had a blanket bond on its managers and the hotel had a blanket bond on employees.)

Floyd Hawk was vice-president of Innkeepers, and testified that he undertook the operation of the hotel in 1961 as resident manager which included management of the entire facilities of the hotel. He was the only one at the hotel paid by Innkeepers. He considered that part of his service was the supervision and management of the Baker Hotel employees. He had no authority to make purchases on behalf of the hotel and stated that, in fact, he never did anything as to major purchases without first getting the O.K. from Delora Norris's representatives. He considered that "I had the power, so to speak, of hiring and discharging". This was confirmed by the statement of Mr. Ziegler, the president of Innkeepers, also in a discovery deposition. However, in answers made under oath to interrogatories, Innkeepers replied that Floyd Hawk, the manager, was the only employee or agent of Innkeepers on the hotel premises.

Delora Norris's auditor stated in an affidavit "that Innkeepers, Inc. has the general supervision of Philip Emma in the performance of his duties".

In response to interrogatories, the plaintiff stated that he had no knowledge of the contract between the hotel and Innkeepers and could not say who his employer was on the date of the occurrence. In plaintiff's deposition taken in 1968 he testified that he had no personal contact with Delora Norris, except that he saw her on the premises occasionally and that he knew that her name was on the liquor license; that the people with whom he dealt at the hotel were Mr. Hawk and Mr. Ziegler; and that as to Hawk, "at the present time he was my employer".

Emma applied for benefits under the Illinois Workmen's Compensation Act following the accident, the application stating that it occurred in the course of his employment by Delora Norris. He received the sum of $5,811.72 for temporary total disability and necessary medical expenses, but there was no adjudication under the compensation act by the Industrial Commission.

There is also in evidence a Workmen's Compensation Liability Policy of Innkeepers which provided for payment of all workmen's compensation liability as imposed by the Illinois Act without exclusion or conditions pertinent to this case. Further coverage provisions provided for payment of liability for damages but excluded any such liability for damages acquired by Innkeepers under contract.

Plaintiff's position is that he must have a common law right of action against one or the other of the defendants either as a matter of law or as a matter for the jury to determine. However, essentially he argues that under the facts he was not an employee in the service of Innkeepers "under any contract of hire, express or implied, oral or written", and that he is therefore not bound by the Act as to Innkeepers. He urges that at least as a matter of law he did not consent to Innkeepers as his employer for Workmen's Compensation Act purposes and that there is a jury question also as to whether he was engaged in Innkeepers' business. He further argues that Innkeepers acted as a management consultant, not as an employer, and that the "loaned servant" provision of the Workmen's Compensation Act is, as a matter of law, not applicable to such management service arrangements which exist over a substantial period of time. Alternatively plaintiff claims that even if there is a "loaned servant" issue, the record requires the finding that this is a jury question when one considers that the agreement between the parties is silent as to the right to hire and fire employees of plaintiff's status.

Defendant Innkeepers claims that there is no question of material fact requiring submission of the case to the jury; that the record clearly shows that when traditional criteria of employment are applied to the facts, Emma was an employee of Innkeepers, the operator of the hotel enterprise. Alternatively, Innkeepers suggests that it may be true that Emma could also have been an employee of Norris as a "loaned employee", or Emma could properly be considered as an employee of both defendants.

Defendant Norris argues that the agreement between her and Innkeepers is an agency agreement and that she remains the employer of Emma as principal. She further argues that Emma is precluded from a common law action against her by his election to file a claim against her under the ...

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