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Peso v. H. A. Bar and Restaurant Co.

Decided: June 18, 1962.


Conford, Gaulkin and Kilkenny. The opinion of the court was delivered by Conford, S.j.a.d.


This is a workmen's compensation case presenting a fairly novel mixed law-fact question concerning the existence of the employment relationship between the owners of certain hotels and a ranking member of the operating staff of the management agency which ran the hotels on a percentage of profit basis under independent contract with the owners. That person was fatally burned on January 19, 1958 in an accident concededly arising out of and in the course of his employment. Under the contract mentioned, all "employees" were to be considered as "in the employ of Owner solely and not in the employ of Agent." Moreover, the individual in question was actually paid by the agency for his services out of funds of the owners.

The Division of Workmen's Compensation held the petitioners' decedent was employed only by the management agency and not by the owners. On appeal the Atlantic

County Court held he was in the joint employ of the agency and the owners. The present appeal is only by the owners, the agency's position being that the determination of the county court should be affirmed in all respects. There is therefore no issue on the present appeal with respect to the proposition that the decedent was an employee of the agency. The only problem for decision is whether he was not also simultaneously an employee of the owners. Since the respective insurers are both financially responsible, and compensability is not contested, petitioners, while contending for an affirmance, have no substantial pecuniary stake in the dispute. The contest is really between the respective insurers of the agency and of the owners. That consideration, nevertheless, does not obviate the necessity for a judicial examination of the question of the owners' liability to the petitioners on the basis of the same factors which would be pertinent were they alone asserting such liability.

Involved in the appeal are also questions concerning the quantum of attorney's fee awarded petitioners and as to whether any allowance of attorney's fee should have been made at all to respondent Tisch Management, Inc. (the managing agent).


The factual background is as follows. For some time prior to December 3, 1956 the Tisch family, through separate corporate instrumentalities, operated the Ambassador and Traymore Hotels in Atlantic City and the Belmont Plaza Hotel in New York City. They held the fee of the Traymore property, and leaseholds of the others. On or about the date mentioned, by a series of transactions apparently contemporaneous and integrated in scheme, the proprietary interest of the Tischs passed to persons identified in the record as the Wells interests, title to the Traymore property ultimately vesting in H. T. Bar and Restaurant Inc. (H. T. Bar, hereinafter), to the Ambassador leasehold in H. A.

Bar and Restaurant Inc. (H. A. Bar, hereinafter), and to the Belmont Plaza leasehold in Wells Plaza Hotel Corporation (Wells Plaza, hereinafter). Simultaneously, three separate management agency contracts, one for each hotel, were entered into by another Tisch corporate affiliate, Tisch Management, Inc. (T.M.I., hereinafter), two being with corporate intermediaries in the transaction, but in effect taken over and adopted by H. T. Bar and H. A. Bar, respectively, as owners, and the third with Wells Plaza, as owner. These agreements were identical, except as to the basis for computation of the fee payable to T.M.I., which varied.

By each of the contracts referred to, the owner appointed T.M.I. as "exclusive operating and managing agent" of the particular hotel property. Exclusive management and control, subject to certain limitations not here material, was vested in the agent. The agreement was for a five-year term, renewable and terminable under stated conditions. The owner was to pay the agent for its services stated percentages, on a sliding scale, of the "net profits." Paragraph 6 provided as follows:

"6. Agent agrees in behalf of Owner to supervise the work of, and to hire and discharge employees. Agent agrees to use reasonable care in the hiring of such employees. It is expressly understood and agreed, however, that all employees are in the employ of Owner solely and not in the employ of Agent and that Agent is in no wise liable to others for any act or omission on the part of such employees nor to employees for their wages or compensation."

Paragraph 7 provided that the agent should maintain a special bank account and deposit therein all moneys received on behalf of the owner, the fund to be used to pay expenses of operation of the hotel and not to be mingled with funds of the agent. Under paragraph 11 the owner agreed to hold and save the agent harmless against any claims or damages arising out of the operation of the hotel except for the agent's gross negligence. Paragraph 14 called

for the owner to carry various kinds of insurance, including workmen's compensation, and upon request to designate the agent as a party insured with the owner.

Paragraph 21 was as follows:

"21. It is agreed that the Agent shall pay no salaries chargeable to Owner to any stockholder, officer or director of the Agent or of Tisch Hotels, Inc. (New York) or Tisch Hotels, Inc. (New Jersey). It is further understood that the salaries of Preston R. Tisch, his secretary and his executive secretary shall be paid by Agent at its sole cost and expense and shall not be charged to Owner. With respect to any employees employed by Agent or the Tisch Hotel Chain whose functions ...

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