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act of an independent contractor in the performance of its contract, and that the Home Telephone Company was not responsible for it. Whether the Home Telephone Company should be held liable for the act of the men who unloaded the car involves two questions: (a) Was the Electric Construction Company an independent contractor? (b) If so, Did the Home Telephone Company participate in the negligent act?
(a) Was the Electric Construction Company an Independent Contractor? Ordinarily such a question is to be determined by the contract, and where it depends solely on the contract, and the contract is in writing, it is a question to be determined by the court. 11 Cur. Law, p. 1897; 16 Am. & Eng. Enc. Law (2d Ed.), p. 191. In Good v. Johnson, 38 Colo. 440 (88 Pac. 439, 8 L. R. A. [N. S.] 896), it was held error to submit a question to the jury when the contract was in writing. The case is valuable on the main question in this case, citing and intelligently reviewing many cases which we have not cited. See, also, Larson v. Bridge Co., 40 Wash. 224 (82 Pac. 294, 111 Am. St. Rep. 904). In Green v. Soule, 145 Cal. 96 (78 Pac. 337), it was held:
"Where the undisputed evidence showed that the plasterer was an independent contractor as to the building contractor defendant, and the subcontract did not require him to place his materials in any dangerous position, the meaning and effect of the contract and the relations of the parties to it were a question of law for the court; and it is error to refuse requested instructions that the subcontractor was an independent contractor as to the defendant, and that, if the jury believed the injury complained of was the result of negligence on the part of the subcontractor they must find for the defendant."
The court also held:
"The fact that the work was to be done under the supervision of an architect, and that the employer had the right to make alterations, deviations, and omissions from the contract, does not change the relation of an independent contractor or subcontractor to that of a mere servant."
This contract is in writing.
(1) The preamble (if it may be so called) to the contract states that the Construction Company has agreed to undertake the construction of a telephone plant and system contemplated by the Telephone Company, and its equipment, and to assume all risks connected therewith. (2) In consideration of mutual promises it made its agreement.
(3) It undertook at its own cost and expense to provide all necessary labor and material, and to erect, construct, and complete an extensive telephone plant and system, and, when completed, to deliver and transfer it to the Telephone Company, for which it was to receive $3,250,000 in bonds in the manner provided in the writing.
(4) This plant and system were outlined in plans and specifications already prepared and identified, and such other plans and specifications as should thereafter, in the judgment of the consulting engineer, be necessary or proper, which were to be made a part of the contract.
(5) Said promise included the installation of 10,000 telephones and the procurement of not less than 7,500 bona fide subscribers' contracts for, a year, the Construction Company being authorized to take such contracts in the name of the Telephone Company.
(6) It promised, further, to procure all necessary real estate and transfer the legal title to the Telephone Company, and all necessary street permits and rights of way.
(7) It agreed to use its best endeavor to secure and transfer to the Telephone Company the property, franchises, and rights belonging to the Co-Operative Telephone Company and its stock
(8) It agreed to employ a chief engineer, who should be selected by it, and who should be under its sole control, who should have authority to act for and on its behalf, and said Construction Company might remove or discharge him and select others as occasion might require.
(9) It agreed to protect the Home Telephone Company against infringements of patent by its selection of tools,
appliances, etc., furnished by it to the Telephone Company, and to give bonds to a trustee to secure it in this and other provisions of the contract.
(10) With a view to facilitating the immediate and proper management of the plant upon completion, the Construction Company undertook at its own expense to obtain and train a sufficient number of operators, linemen, and other necessary workmen and employés, and engage them for the use of the Telephone Company after the termination of the contract.
(11) A penalty of $150 a day for the failure of prompt completion and delivery of the plant is provided by the contract.
Counsel for plaintiff contend that there is testimony tending to show, and that the jury should have been permitted to find, as they possibly may have found, that the contract was a sham and the Construction Company a fictitious entity, practically the Home Telephone Company, the Construction Company being a mere tool of the Telephone Company, and therefore not an independent contractor. In support of this claim they urge a similarity in the personnel of the officers of the two companies and many provisions of the contract of an alleged tendency to show the reservation of control of the Construction Company and its employés by the Telephone Company.
The case most strongly relied on in support of this proposition is that of Holbrook Corporation v. Perkins, 147 Fed. 166, 77 C. C. A. 462. The Holbrook copartnership was sued by a brakeman of the Boston & Maine Railroad for an injury, having been swept from the top of a moving car by a guy rope attached to a derrick. Holbrook defended on the ground that the Atlantic Construction Company alone was liable as an independent contractor. An alleged contract was introduced in support of this claim. The court allowed the jury to find that the Holbrook Company organized the Atlantic Construction Company, a corporation of doubtful validity, inasmuch as it had no capital, and consisting of the
members of the copartnership and its agents, and that a written contract entered into with it for the construction of certain work was not a bona fide contract, but was a mere piece of circumvention, devised to avoid legal liability for accidents and attachment of property in tort actions. The testimony was clear and explicit as to this, and the jury were instructed that, if there was no bona fide contract, there could be no immunity for the Holbrook Company. This doctrine seems well supported, and counsel might well have cited the later case of Exploration, etc., Co. v. Steel Co., 177 Fed. 829, 101 C. C. A. 39 et seq., and with this rule we have no fault to find. We might even go the length of saying that the validity of the corporate organization would not conclude the subject of the bona fides of the contract, and still say that in this case the question should not have been left to the jury. In the case last cited it was said:
"In United States v. Transit Co. (C. C.), 142 Fed. 247, 255, it was charged that the transit company was a dummy corporation organized, owned, and operated by the stockholders of the brewing company as a device to cover the receipt of rebates on interstate shipments of beer. After an exhaustive examination of the authorities, the court stated the principle thus:
"If any general rule can be laid down in the present state of authority, it is that a corporation will be looked upon as a legal entity, as a general rule, and until sufficient reason to the contrary appears; but, when the motion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.'
Neither this case nor United States v. Transit Co. (C. C.), 142 Fed. 247, was a negligence case, but related, to insolvency where rights of creditors were involved. This is unimportant, however. In the present case there is no testimony from which the want of bona fides can be inferred, unless it be the statement in the contract that the Telephone Company shall not be liable for damages on account of injuries to third persons. It will not be gainsaid that the Telephone Company had a right to let
its contract to an independent contractor, and that, if it did, the legal effect would be to make the latter only liable for accidents. The bona fides of such a contract could not depend on the absence of a motive to avoid such liability; for, in the first place, it is not an unlawful motive, nor an immoral one, and is not a blow to any one's rights, if an actual bona fide contract is made, and for that reason we say that the presence of such a motive, even though it was the sole motive, is as consistent with the bona fides of the contract, as with the absence thereof, and we have seen in the cases cited regarding legal entity, the presumption of bona fides exists if such motive is all the evidence upon which a different claim is based. In this case, it is shown that two valid corporations existed, and that both had capital and assets, and that they made a contract which on its face is valid. Indeed, they joined with another corporation in a tripartite contract which is inconsistent with any other view than bona fides as to the first contract. Even if counsel's contention that these contracts established the fact that the relation of master and servant was created were true, it does not tend to prove that the contract was not bona fide, for the parties were competent to make such contracts as well as others, and we understand that this is not disputed. Moreover, if that were the effect of the contract, it would settle the question of liability, for that alone would be sufficient to establish the application of the rule of respondeat superior as to the Telephone Company. There is no testimony in this case that makes a prima facie case of lack of bona fides, or circumvention.
We come next to the provisions which tend to show that this contract created the relation of master and servant. We have already called attention to some of the many things that show validity and bona fides of the con
It is said that this writing does not contain a definite description of what the Construction Company must do, inasmuch (a) as the plans and specifications were not