The opinion of the court was delivered by: DUMBAULD
The Power Company was adding a fifth unit for generation of electricity at its plant near New Castle. It chose to do this work by using the services of a general contractor, U E, for a total contract price of $5,050,000.00 (Ex. B). The contract with U E became effective on May 15, 1962.
Previously thereto, doubtless in order to take advantage of its bargaining power as a large user of electrical machinery and equipment, it had entered into various other contracts with other suppliers. These arrangements might be described as options. If the general contractor U E saw fit, these contracts were to be assigned by the Power Company to U E, who would enjoy the benefit of the bargains made with the Power Company (Ex. B, Par. 2C).
One of the contracts thus assigned (Ex. C; Tr. 23, 29) to U E was one with Babcock & Wilcox for erection of the steam generator (commonly called a boiler) (Ex. A). This contract, adoption of which by U E was mandatory under its general contract with the Power Company (Ex. B, Par. 2D), went into effect on May 8, 1962. The assignment was signed by all three parties, thus effecting a novation, apparently as of Nov. 4, 1962. Assignment of the boiler contract was contemplated ab initio under its terms (Ex. A, Par. 1A).
The boiler contract did not cover the "clear well tank", but since B & W had workmen represented by the boilermakers' union on the premises (Tr. 72-74), U E decided to have B & W do the work on the tank, pursuant to a separate arrangement (Ex. F). The work on the tank was part of the general undertaking covered by U E's contract with the Power Company to construct the fifth unit for the sum of $5,050,000.00 (Ex. B). U E paid B & W and was reimbursed out of the $5,050,000.00 from the Power Company (Tr. 70, 80).
For administrative purposes in the "battle of forms" U E handled the clear well tank construction as a "change order" (No. 2, Ex. F) dated December 5, 1962 (and accepted by B & W apparently on or about that date) in connection with the boiler contract (Ex. A), adding the price of the clear well tank work ($65,000.00) to the price of the boiler work (Tr. 51-52).
But erection of the clear well tank was not part of the work which B & W obligated itself to perform when it entered into its original contract (Ex. A) to erect the boiler. The consideration of $65,000.00 specified in change order No. 2 was separately negotiated for the work on the clear well tank.
The case is now before us on defendant's motion for summary judgment, upon evidence received at a hearing on August 16, 1967, pertinent parts of which are referred to hereinabove.
Defendant U E contends that it is a "statutory employer" of plaintiff under the Pennsylvania Workmen's Compensation law, 77 P.S. § 52, which reads as follows:
"An employer who permits the entry upon premises occupied by him or under his control of a laborer or an assistant hired by an employe or contractor, for the performance upon such premises of a part of the employer's regular business entrusted to such employe or contractor, shall be liable to such laborer or assistant in the same manner and to the same extent as to his own employe."
This provision was designed to extend relief by way of compensation to employees of subcontractors, but has been used by general contractors to avoid tort liability. This is legitimate, as exemption from common law liability is conferred pari passu with extension of statutory liability.
The tests defining applicability of the statutory employer doctrine have been well set forth in the following cases: Qualp v. James Stewart Co., 266 Pa. 502, 503, 507-509, 109 A. 780 (1920); McDonald v. Levinson Steel Co., 302 Pa. 287, 295, 153 A. 424 (1930) [laying down five points]; Jamison v. Westinghouse Electric Corp., 375 F.2d 465, 467-468 (C.A. 3, 1967); Stipanovich v. Westinghouse Electric Corp., 210 Pa. Super. 98, 100-101, 231 A.2d 894 (1967).
We are here chiefly concerned with the fourth criterion,
whether part of the general contractor's business (or obligation to ...