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M & M Electric Co. v. Indus. Com.





Appeal from the Circuit Court of Whiteside County; the Hon. Dan H. McNeal, Judge, presiding.


Rehearing denied May 31, 1974.

This is a workmen's compensation action brought by Timothy J. McGinn against M & M Electric Company and its insurance carrier, Indiana Insurance Company, based upon an accident which occurred at the steel mill of Northwestern Steel and Wire Company (Northwestern) located at Sterling, Illinois. Northwestern had submitted a purchase order to M & M Electric for the performance of certain heavy-duty electrical work involved in changing over to a new electric furnace. McGinn fell from a height of approximately 30 feet while on the job, and is now a paraplegic. There is no controversy as to McGinn's physical disabilities.

M & M and its insurance carrier brought Northwestern into the workmen's compensation action by way of a "cross-claim," alleging that Northwestern was a borrowing employer, and therefore was primarily liable for the payment of workmen's compensation benefits, making M & M only secondarily liable. This cross-claim was opposed by claimant McGinn and Northwestern.

The hearings before the arbitrator and the Industrial Commission were largely directed to the issue of whether or not Northwestern was a borrowing employer. The arbitrator found that it was not a borrowing employer and dismissed Northwestern from the case. The Industrial Commission, after hearing further evidence, sustained the decision of the arbitrator and adopted it as the decision of the Commission. M & M then brought a petition for writ of certiorari in the circuit court of Whiteside County, and that court reversed the decision of the Commission, holding that Northwestern was a borrowing employer as a matter of law. This appeal is from the decision of the circuit court.

The loaned-employee concept has been specifically incorporated into the Illinois Workmen's Compensation Act as section 1(a)4 of that act (Ill. Rev. Stat. 1967, ch. 48, par. 138.1(a)(4)), as follows:

"(a) The term `employer' as used in this Act shall be construed to be:

4. Where an employer operating under and subject to the provisions of this Act loans an employee to another such employer and such loaned employee sustains a compensable accidental injury in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such injured employee, such loaning employer shall be liable to provide or pay all benefits or payments due such employee under this Act and as to such employee the liability of such loaning and borrowing employers shall be joint and several, provided that such loaning employer shall in the absence of agreement to the contrary be entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this paragraph together with reasonable attorneys' fees and expenses in any hearings before the Industrial Commission or in any action to secure such reimbursement. Where any benefit is provided or paid by such loaning employer the employee shall have the duty of rendering reasonable cooperation in any hearings, trials or proceedings in the case, including such proceedings for reimbursement.

Where an employee files an Application for Adjustment of Claim with the Industrial Commission alleging that his claim is covered by the provisions of the preceding paragraph, and joining both the alleged loaning and borrowing employers, they and each of them, upon written demand by the employee and within seven days after receipt of such demand, shall have the duty of filing with the Industrial Commission a written admission or denial of the allegation that the claim is covered by the provisions of the preceding paragraph and in default of such filing or if any such denial be ultimately determined not to have been bona fide then the provisions of Paragraph K of Section 19 of this Act shall apply.

An employer whose business or enterprise or a substantial part thereof consists of hiring, procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this section."

We have previously recognized that the primary test for establishing a loaned-employee relationship is the right to control. In Raymond Concrete Pile Co. v. Industrial Com. (1967), 37 Ill.2d 512, at pages 516 and 517 we stated: "In identifying the employer of a loaned employee the dominant circumstance has been the right to control the manner in which the work is to be done. (See e.g., American Stevedores Co. v. Industrial Com. 408 Ill. 449, 454; Fransen Construction Co. v. Industrial Com., 384 Ill. 616; Allen-Garcia Co. v. Industrial Com., 334 Ill. 390.) Stated in more abstract terms, the most significant inquiry has concerned the extent to which the loaning employer delegated to the borrowing employer the right to control the manner of doing the work. Often the determination must be made on the basis of inferences from evidence that bears only indirectly on that issue. In this case the evidence bears directly upon the issue, but it will support conflicting inferences."

There are many different considerations which may be applicable to the loaned-employee question. (See generally Restatement (Second) of Agency, section 220, p. 485 et seq.) Due to the large number of factors which may be relevant to any factual situation, we have held that generally the existence of the loaned-employee relationship is a question of fact, and therefore a question for the Industrial Commission. (Gundich v. Emerson-Comstock Co. (1961), 21 Ill.2d 117.) The test for whether or not a question is one of law or fact in such cases was set forth in Henry v. Industrial Com. (1952), 412 Ill. 279. At page 284 we stated: "If the undisputed facts upon any issue permit more than one reasonable inference to be drawn therefrom, the determination of the issue presents a question of fact, and the conclusion of the commission in deciding the question will not be disturbed upon review; only if the undisputed facts are susceptible of but a single inference can the question be characterized as one of law [citations]." A court may reverse a decision of the Industrial Commission as to a finding of fact only when the decision is against the manifest weight of the evidence. Wilson v. Industrial Com. (1972), 51 Ill.2d 522, 524; Wooldridge v. Industrial Com. (1970), 47 Ill.2d 244, 246.

The facts are uncontradicted in this case, and our inquiry is whether the finding of the Industrial Commission that Northwestern was not a borrowing employer under the Act is contrary to the manifest weight of the evidence.

McGinn was a general employee of M & M, where he worked as an apprentice electrician. He was paid only by M & M, took work orders only from the M & M foreman, worked where assigned by M & M and traveled to and from work in an M & M truck. It is agreed that he never explicitly consented to become an employee of Northwestern. McGinn could not be considered an employee of Northwestern unless it can be shown that the very nature of the project gave control over him to ...

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