Sharp v. Gallagher

447 N.E.2d 786, 95 Ill. 2d 322, 69 Ill. Dec. 351, 1983 Ill. LEXIS 329
CourtIllinois Supreme Court
DecidedMarch 25, 1983
Docket54980
StatusPublished
Cited by48 cases

This text of 447 N.E.2d 786 (Sharp v. Gallagher) is published on Counsel Stack Legal Research, covering Illinois Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sharp v. Gallagher, 447 N.E.2d 786, 95 Ill. 2d 322, 69 Ill. Dec. 351, 1983 Ill. LEXIS 329 (Ill. 1983).

Opinion

JUSTICE MORAN

delivered the opinion of the court:

Plaintiff, Russell Dean Sharp, filed a two-count complaint against the defendants, Robert Gallagher and Daniel Henry, individually and as partners doing business as Orchard Hill Building Company (Orchard Hill). Count I alleged violations of the Structural Work Act (Ill. Rev. Stat. 1977, ch. 48, par. 60 et seq.). Count II was based on common law negligence. Defendants moved to dismiss both counts, contending they were plaintiff’s employer and, therefore, the suit was barred by section 5(a) of the Workmen’s Compensation Act (Act) (Ill. Rev. Stat. 1977, ch. 48, par. 138.5(a)). The circuit court of Cook County granted defendants’ motion. A majority of the appellate court reversed on the basis of the dual-capacity doctrine (94 Ill. App. 3d 1128), and we allowed defendants leave to appeal.

On January 16, 1978, plaintiff was working as a carpenter-helper at a residential construction site. While building a garage, he slipped and fell from an icy scaffold and was injured. He filed an application for adjustment of claim before the Industrial Commission, naming Farmingdale Millwork (Farmingdale) as his employer. He then brought the instant suit against defendants.

Defendants filed a motion to dismiss, contending Orchard Hill and Farmingdale were the same legal entity and that the partnership, doing business as Orchard Hill, was plaintiff’s employer. On this basis, defendants argued the instant suit was barred by the Act. In response, plaintiff argues that Orchard Hill and Farmingdale were separate legal entities. In the alternative, plaintiff claims the partners acted in different capacities under these assumed names and, therefore, defendants should be liable under the dual-capacity doctrine.

In support of his position, plaintiff attached a copy of defendant Gallagher’s deposition in which Gallagher stated Orchard Hill was the general contractor for the job and owned, through a land trust, the beneficial interest in the construction-site property. Gallagher described Farmingdale as a service organization, a “conduit” by which Orchard Hill obtained windows. He said that while Farmingdale was plaintiff’s employer, Orchard Hill owned Farmingdale, and Orchard Hill and Farmingdale were “the same thing.”

Both parties filed affidavits. Plaintiff’s attorney attached to his affidavit quarterly Federal income tax withholding forms which showed that Farmingdale and Orchard Hill had separate Federal identification numbers for tax purposes.

Defendant Gallagher’s affidavit stated that Orchard Hill absorbed all of Farmingdale’s losses and profits and paid the premiums for Farmingdale’s workmen’s compensation insurance policy. Defendants also submitted an affidavit of Orchard Hill’s accountant which stated that no Federal or State income tax return was prepared on behalf of Farmingdale. Farmingdale was not a separate business entity for general accounting or Federal income tax purposes, and it never had any reportable income for tax purposes. Its costs and expenses were reimbursed in total by Orchard Hill.

The trial court found that the Gallagher and Henry partnership doing business as Orchard Hill and Farmingdale were the same, as a matter of law, and granted defendants’ motion to dismiss. The appellate court agreed with the trial court that they were the same and that Orchard Hill was plaintiff’s employer. However, the court reversed, concluding that under the dual-capacity doctrine, defendants’ capacity as landowners conferred upon them a duty independent of that owed to plaintiff as an employer.

Initially, we note the record supports the trial and appellate courts’ determination that Farmingdale and Orchard Hill were the same and that the partnership doing business as Orchard Hill was plaintiff’s employer. The parties do not question this finding in their briefs. Indeed, in response to a question at oral argument, plaintiff admitted there is only one legal entity — the Gallagher and Henry partnership doing business as Orchard Hill and Farmingdale. The remaining question is whether a contractor-employer that also owns the land on which an employee is injured is immune from common law or statutory suits under the exclusive-remedy provision of the Act.

The legislature enacted the Workmen’s Compensation Act to abrogate the common law rights and liabilities which previously governed an injured employee’s ability to recover against his employer. The Act established a new “system of liability without fault, designed to distribute the cost of industrial injuries without regard to common-law doctrines of negligence, contributory negligence, assumption of risk, and the like.” (Gannon v. Chicago, Milwaukee, St. Paul & Pacific Ry. Co. (1958), 13 Ill. 2d 460, 463.) “Balanced against the imposition of no-fault liability upon the employer are statutory limitations upon the amount of the employee’s recovery, depending upon the character and the extent of the injury. As part of this ‘balancing,’ the Act further provides that the statutory remedies under it shall serve as the employee’s exclusive remedy if he sustains a compensable injury.” McCormick v. Caterpillar Tractor Co. (1981), 85 Ill. 2d 352, 356.

Section 5(a) of the Act provides in relevant part:

“No common law or statutory right to recover damages from the employer *** for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act ***.” Ill. Rev. Stat. 1977, ch. 48, par. 138.5(a).

Plaintiff argues the Gallagher and Henry partnership held itself out as a business having two capacities, one as employer under the Farmingdale Millwork designation and the other as landowner under the name Orchard Hill Building Company. He supports this contention by again asserting that Farmingdale and Orchard Hill had separate Federal identification numbers for purposes of the employer’s quarterly Federal income tax withholding forms. On this basis, plaintiff maintains the defendants’ partnership existed in a dual capacity and the instant suit against defendants in their capacity as landowners is not barred by the Act. Plaintiff relies on Reed v. Steamship Yaka (1963), 373 U.S. 410, 10 L. Ed. 2d 448, 83 S. Ct. 1349, Smith v. Metropolitan Sanitary District (1979), 77 Ill. 2d 313, and Marcus v. Green (1973), 13 Ill. App. 3d 699.

In Reed, a longshoreman was injured loading a ship his employer had chartered. The court held the exclusivity provision of the Federal Longshoremen’s and Harbor Workers’ Compensation Act (33 U.S.C. sec. 901 et seq. (1976)) did not preclude suit against the employer, as ship charterer, for injuries caused by the unseaworthiness of the vessel. The court’s holding hinged upon peculiarities of maritime law and the lack of congressional action to change the court’s long line of cases in this area. However, as noted in Kottis v. United States Steel Corp. (7th Cir. 1976), 543 F.2d 22, cert. denied (1977), 430 U.S. 916, 51 L. Ed. 2d 594, 97 S. Ct.

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Cite This Page — Counsel Stack

Bluebook (online)
447 N.E.2d 786, 95 Ill. 2d 322, 69 Ill. Dec. 351, 1983 Ill. LEXIS 329, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sharp-v-gallagher-ill-1983.