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Cox v. Bond Transportation Inc.

Decided: January 27, 1969.

EDWARD A. COX, PLAINTIFF-APPELLANT,
v.
BOND TRANSPORTATION, INC., DEFENDANT-RESPONDENT. MICHAEL F. MURPHY, BY HIS GUARDIAN AD LITEM, IRIS R. MURPHY AND DENNIS MURPHY, PLAINTIFFS-APPELLANTS, V. BOND TRANSPORTATION, INC., A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT



For reversal -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For affirmance -- None. The opinion of the court was delivered by Francis, J. Hall, J. (concurring).

Francis

In the consolidated motor vehicle negligence actions which are the subject of this appeal, plaintiffs Cox and Murphy recovered substantial personal injury verdicts against defendants Bond Transportation, Inc. and Manuel McCaskill. Bond's subsequent appeal to the Appellate Division resulted in a reversal and a remand for entry of judgments in its favor. 99 N.J. Super. 335 (App. Div. 1968). McCaskill did not appeal. We granted certification on plaintiffs' petition. 51 N.J. 571 (1968).

McCaskill was the owner and operator of the tractor involved in the collision which resulted in these damage actions. The basic issue is whether by reason of the Interstate

Commerce Commission regulations defendant Bond Transportation, Inc., as a certificated interstate carrier, should be deemed to have had such possession and control over the tractor at the time of the accident as to make it liable for McCaskill's negligent operation. The trial court held that under the evidence adduced the issue was a factual one for jury determination.

The situation out of which these claims arose is unusual. For many years prior to January 22, 1965, defendant Bond had been engaged in the intrastate and interstate transportation of oil. Its principal place of business was in Woodbridge, New Jersey. It held an Interstate Commerce Commission Franchise as an interstate carrier, the certificate number being I.C.C. 15727. Bond had a number of tractors and tank trailers of its own which were used in the ordinary operation of its business; all had the company name and I.C.C. number painted on them. In the busy season, i.e., in advance of and during the cold weather, additional tractors were hired from their owners to assist in the transportation of oil by hauling Bond tank trailers. Such owners usually drove the vehicles personally. They are described in the record as lease-operators (of which more later). The company furnished all of them with a metal decal bearing the Bond name and I.C.C. number which decal was fastened to the side of the tractor. According to Daniel Harrison, Vice-President and part-owner of Bond, the Interstate Commerce Commission regulations required the name of the lessee and the decal to be placed on the rented tractors. Five to seven such lease-operators had been so engaged by Bond for a number of years and were working in that capacity at the time of the accident involved here. These operators delivered their loads during the day to the places designated by Bond's dispatcher. On returning to the Bond yard or terminal at the end of the day's work, they would be given their assignment for the next day by the dispatcher or they would receive it from him by telephone later in the evening.

Defendant Manuel McCaskill was the owner of a tractor of the type hired by Bond. By arrangement with Harrison he was engaged in February 1964 as a lease-operator under what was called an oral lease. McCaskill described himself as a seasonal operator for Bond. He testified that during his first discussion with Harrison he was told that if he "worked out" he would be kept busy during the season. He said also that in that period he could not haul for anyone else without the company's consent. During the offseason he could and did seek other work. It is plain from his statements that (1) he considered Bond to have had first call in season on the use of his tractor and his services as its driver, and (2) under the oral lease his tractor was to be available for interstate as well as intrastate transportation. Under the agreement he was to receive 65% of the charges made by Bond for each of his hauls. This was the same rate of pay as all other lease-operators received.

After February 1964, McCaskill worked sporadically for Bond until November 1964. In the summer of 1964, except for a few occasions in July, when Bond called him, he sought work from other companies. From December 7 until January 22, 1965 he hauled fairly regularly and exclusively for Bond.

McCaskill lived in Long Branch, N.J., and the Bond terminal was at Woodbridge, N.J. His work day began at the terminal at 4:00 or 5:00 A.M., and it was necessary for him to be there at that time. Like the other lease-operators, on return to the terminal at the end of the day he would receive the next morning's assignment if it had been decided upon at that time; if not, it would be given to him over the telephone later in the evening by the dispatcher. This meant, of course, that McCaskill would hold himself and his tractor available to respond to the assignment by appearing at the terminal between 4:00 and 5:00 A.M. the following morning. Inferably also, on his version of the agreement with Bond, he could not seek other work until after he received the evening message that his services would

not be needed the next day. In order to facilitate the operation he would either leave his tractor at the terminal at the end of the day, sometimes attached to Bond's trailer, or he would detach the trailer and drive the tractor to his home and back to the terminal in the morning. At one point he testified he drove the tractor home and back most of the time; at another point he said he generally left the tractor at the yard and used a light pick-up truck, also owned by him, for the trip to and from the yard. Harrison's statements on this subject were somewhat at variance. He said that most of the time McCaskill detached the trailer at the end of the day and drove the tractor home and back again in the morning.

Harrison described McCaskill as a lease-operator and their relationship as arising out of an oral lease. He regarded the connection between them as a loose one, a seasonal one, on a day-to-day basis whenever Bond needed McCaskill's services. He said that the latter was free to work for anyone else at any time and was under no obligation to hold himself available for Bond.

The credibility of Harrison's testimony on some aspects of the arrangement between his company and McCaskill was open to serious question. Obviously the jury decided the issue against him. Harrison was called first as a plaintiff's witness and his direct, cross and redirect examination covers 48 pages of the record; he was called later as a defense witness and the direct, cross and up to the last question on redirect examination takes up 47 pages of the record. This last question, a most leading one, put by his company's attorney was:

"Q. Isn't that also a fact sir, that when you, Mr. Harrison, on behalf of Bond Transportation hired Mr. McCaskill on this leased operation, that the agreement was that he was to haul strictly intrastate, within the state of New Jersey when he hauled for Bond. Is that correct?

A. Yes."

It is the fact that with the exception of one interstate movement all of McCaskill's trucking for Bond was intrastate. But it does not follow therefrom that his lease-operator agreement was limited to intrastate work. There is substantial evidence to show that his engagement was an unqualified one -- to assist generally in the transportation operations of Bond without any specification or restrictions respecting either interstate or intrastate operation. Moreover, the circumstances reveal that Bond expressly qualified McCaskill to operate his tractor as an interstate carrier. When McCaskill first became a lease-operator of Bond, according to one portion of Harrison's testimony the company gave him a metal decal to be screwed to the side of his tractor. It contained the company name and I.C.C. number. Its size does not appear. Harrison said the decal was given because the Interstate Commerce Commission regulations required it, and that thereafter it was always on the tractor. He said further that such a decal or sign was not needed for intrastate carriage; it was needed only to qualify a vehicle for interstate transportation.

McCaskill agreed that it was necessary to have a legend on the door of his tractor showing the name of the company for which he was operating and its I.C.C. authorization number, and further, that Bond required him to have it there. He said, however, that no metal decal was available for his truck at the time. Consequently the employee in charge of Bond's garage gave him a cardboard and a company stencil to prepare his own sign. He did so and placed it on his tractor. It read: "Bond Transportation, Woodbridge, N.J., I.C.C. 15727" in letters of substantial size. It remained attached at all times thereafter, even on the occasions during the winter season when he drove the tractor between the terminal and his home. Harrison knew this and never told him to remove it. There is no doubt that it was there when the accident in question happened. Moreover, the tractor was taken back to the Bond terminal from the scene

of the accident and, according to McCaskill, he used it in Bond's hauling work thereafter.

We do not regard of major significance the conflict in the testimony of McCaskill and Harrison as to whether the tractor at all times bore the Bond metal decal as asserted by Harrison, or the cardboard sign described by McCaskill, or whether it bore both decal and sign, as the jury could have found. The legal effect of decal and sign is substantially the same.

Harrison testified also that his company subjected the equipment of the lease-operators to the same safety inspection rule as was applied to its own equipment. In addition, he considered that the lease-operators, such as McCaskill, were subject to the same company supervision while they were on the road as were the regular employee-operators.

On January 22, 1965, at the customary early morning hour, McCaskill drove from his Long Branch home to the Woodbridge terminal in his light pick-up truck. His tractor bearing the Bond sign had been left there at the end of the previous day's work. He hooked the tractor to the tank-trailer and transported four or five loads of oil from the Paragon Oil Company in Newark, N.J. to a Bond customer in Whippany, N.J. On completion of his assignment he returned to the terminal at Woodbridge. His pick-up truck would not start so he decided to leave it there and drive home and back to the terminal in the tractor. No one suggests that his seasonal work for Bond had ended, or that the decal was removed or ordered removed from the tractor before McCaskill drove out of the yard. While moving south on Route 35 he became involved in a collision with vehicles of the plaintiffs Cox and Murphy.

Subsequently Cox and Murphy brought this action against McCaskill and Bond Transportation, Inc. The theory of the action was twofold: (1) Bond was liable for McCaskill's negligence under the common-law respondeat superior doctrine; (2) by reason of the Interstate Commerce Commission regulations McCaskill, as a lease-operator, was operating

his tractor within Bond's franchise at the time of the accident and thus Bond was vicariously liable for McCaskill's negligence. The trial judge held that McCaskill was an independent contractor, that he was driving as such when the accident happened, and therefore common law principles of respondeat superior were not applicable. Consequently he granted the company's motion to dismiss that claim. The judge concluded, however, that a jury question existed as to whether Bond was vicariously liable for McCaskill's negligence because he was a lease-operator whose tractor bore either a metal decal or a sign indicating that he was operating it on the public highway under Bond's I.C.C. franchise and within the activity authorized by it. The jury was charged generally with respect to the Interstate Commerce Commission regulations and the nature of the relationship created thereby between the franchised carrier and a lease-operator. At the conclusion of the charge the following special interrogatory on the subject was submitted to them to be answered at the conclusion of their deliberations:

"Do you find that at the time of the accident Manuel McCaskill was operating his tractor in carrying on the activity of Bond Transportation Company?"

On returning verdicts for the plaintiffs, the jury answered the question in the affirmative. As indicated hereafter this answer signified a finding by the jury that McCaskill had been engaged to operate in intrastate and interstate commerce, had been qualified by Bond to so operate, did in fact drive in interstate commerce, and at the time of the accident in driving the tractor home he was engaging in an activity which was at least in part for the benefit of Bond. The resulting judgments against Bond were reversed on appeal on the ground that McCaskill was not operating his tractor in interstate commerce at the time of the accident and therefore Bond could not be deemed to be in possession and control of it within the meaning of the Interstate Commerce

Commission regulations. Such regulations not being applicable, the Appellate Division declared McCaskill's status was that of an independent contractor for whose conduct Bond could not be held liable vicariously.

I

In 1935 Congress enacted the Motor Carrier Act, now Part II of the Interstate Commerce Act, 49 U.S.C. § 301 et seq. (1964). Under its authorization the Interstate Commerce Commission adopted comprehensive rules regulating the conduct and operation of the motor truck industry in interstate commerce. Many of them related to the safety of the equipment to be used on the highways and to the physical condition of the operators driving it. As a result of these regulations a substantial number of certificated carriers began to use equipment owned by non-franchised truckers. This was accomplished by a variety of leases and other arrangements, written and oral (frequently for a one-way trip or a single round trip) under which such owner-operator truckers carried on the operations of the authorized carrier. The use of equipment of non-franchised owner-operators was not unlawful under the Act or the regulations. In contracting with such persons the carriers took care to constitute them independent contractors. In this way the franchised carriers were able to avoid the Commission safety regulations that had been prescribed for equipment and drivers in order to protect the public. Moreover, many of the noncertificated owner-operators were itinerant truckers, known as "gypsies," who had poor equipment and little financial capacity. These satellite practices, which are discussed at length in American Trucking Assos. v. United States, 344 U.S. 298, 73 S. Ct. 307, 97 L. Ed. 337 (1953) and Christian v. United States, 152 F. Supp. 561 (D. Md. 1957), came under investigation by the Interstate Commerce Commission, and in 1951 and 1956 regulations designed to remedy the evil, particularly the trip-leasing, were adopted pursuant to 49 U.S.C. § 304(e).

Section 304(e) authorized the Commission to prescribe regulations "with respect to the use by motor carriers (under leases, contracts or other arrangements) of motor vehicles not owned by them, in the furnishing of transportation of property * * *." Specifically the agency was given authority to adopt regulations

"(1) * * * requiring that any such lease, contract, or other arrangement shall be in writing and be signed by the parties thereto, shall specify the period during which it is to be in effect, and shall specify the compensation to be paid by the motor carrier, and requiring that during the entire period of any such lease, contract, or other ...


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