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MUSTANG TRANSP. CO. v. RYDER TRUCK LINES

September 28, 1981

Mustang Transportation Company, R.L. Dease, Henry Crowder and Canal Insurance Company
v.
Ryder Truck Lines, Inc. and Liberty Mutual Company



The opinion of the court was delivered by: GREEN

MEMORANDUM

 This lawsuit arose out of a collision between an automobile and a tractor-trailer, which occurred on December 7, 1969 on U.S. Route 22 in Juniata County, Pennsylvania. Edward Renzi, a passenger in the car, died as a result of injuries suffered in the accident while Charles Benedict and Daniel Mattia, the driver of the car and another passenger, were injured. The estate of Mr. Renzi instituted an action against Henry Crowder, the driver of the tractor-trailer and the owner of the tractor portion; Mustang Transportation Company ("Mustang"), owner of the trailer portion; and R.L. Dease, Vice-President and Secretary of Mustang. Ryder Truck Lines ("Ryder"), which had hired the Crowder/Mustang tractor-trailer to deliver a load from New York to Michigan, was added to the initial lawsuit as a third-party defendant. Messrs. Benedict and Mattia brought another action against Henry Crowder and R. L. Dease. Subsequently, the two cases were consolidated and eventually were settled for $ 117,500.00 pursuant to a court-approved stipulation.

 Under the terms of that stipulation, Ryder and its insurer, Liberty Mutual Insurance Company ("Liberty") agreed to pay one half of the settlement amount, and Mustang, its insurer, Canal Insurance Company ("Canal") and R.L. Dease agreed to pay the other half. However, the parties stipulated that these payments did not constitute admissions of liability or of proportionate responsibility. Pursuant to the agreement, the issues of liability and insurance coverage were to be determined by a court in another suit. Plaintiffs Crowder, Mustang, Canal and Dease brought this diversity action in order to resolve these questions, and defendants Ryder and Liberty have counterclaimed. The matter has been submitted to me for trial without a jury. This memorandum constitutes findings of facts and conclusions of law as required by Fed.R.Civ.P. 52(a).

 I.

 For purposes of determining the issues of liability and insurance coverage, the parties have stipulated to the following facts. The acts and omissions of plaintiff Henry Crowder were the proximate cause of the injuries and damages suffered by Renzi, Benedict and Mattia. At the time of the accident, Mr. Crowder was transporting a load from New York to Michigan pursuant to a one-way lease agreement with Ryder. (Exhibit A, Amended Complaint) This lease agreement identifies "Mustang Transportation-Henry Crowder" as the lessors and is signed by Crowder on their behalf. The goods in this haul were commodities regulated by the Interstate Commerce Commission ("ICC"); Mustang did not have an ICC permit to haul regulated commodities in either Pennsylvania or New Jersey. The truck driven by Crowder consisted of a tractor portion owned by him and a trailer portion owned by Mustang. He was operating the truck under a lease agreement between Mustang and him, which was in effect at the time of the accident. In the trip preceding the one during which the accident occurred, Crowder had transported on behalf of Mustang goods from Georgia to New Jersey. On the instructions of R.L. Dease, Vice-President of Mustang and another plaintiff in this case, Crowder sought a load for the return trip to Georgia from the Lester Newton Trucking Company. It did not have a load but directed Crowder to Ryder, which did have one. Without speaking to anyone at Mustang, Crowder entered into, on behalf of Mustang and himself, the one-way lease agreement with Ryder described previously. On prior occasions, Crowder and others driving vehicles owned or leased by Mustang had entered into contracts with third parties for hauling goods without first obtaining the permission of Mustang. Also, in the past, when Dease was unable to find return loads for Crowder and other drivers of vehicles owned or leased by Mustang, he told them that they could try to find other loads to haul on behalf of Mustang. Mustang did not learn of the lease agreement with Ryder signed by Crowder until December 8, 1969, the day after the accident. Ryder paid Mustang for the use of the tractor-trailer in accordance with the agreement; in turn, Mustang paid Crowder pursuant to the terms of the lease between them.

 II.

 The first issue to be resolved is the nature of the relationship of Henry Crowder to Mustang and to Ryder at the time of the accident. Disclaiming liability for the acts of Crowder, Mustang and Ryder each denies that he was its agent or employee (servant) *fn1" at the time of the accident. In fact, each contends that the other was his principal or employer (master).

 The Restatement (Second) of Agency defines agency as:

 
... the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.
 
Restatement (Second) of Agency, § 1 (1957).

 The one for whom action is to be taken is the principal, and the one who is to act is the agent. Id. The Restatement characterizes a servant as "a species of agent" (Comment a to § 2) and defines it as:

 
... an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master.
 
Id., § 2

 An agent who is not a servant is an "independent contractor." An independent contractor is one who "contracts to act on account of the principal." (Comment b to § 2 of the Restatement (Second)). The distinction between the relationship of master/servant and that of principal/independent contractor, according to the Restatement, is that in the former situation, the master is responsible to third persons for the physical conduct of his servant. Id. Since this case requires a determination of liability for the physical conduct of Crowder at the time of the accident, I must decide whether, as to Mustang and to Ryder, Crowder acted as a servant or as an independent contractor. *fn2" I begin with an analysis of the relationship between Crowder and Mustang.

 As noted earlier, at the time of the accident, the relationship between Mustang and Crowder was defined by a lease agreement. Under Georgia law, *fn3" one's status as servant or independent contractor turns on whether the employer has the power to control the manner in which the work is executed or whether he merely has the right to require certain results. Fidelity & Casualty Co. v. Windham, 209 Ga. 592, 74 S.E.2d 835, 837 (1953). The Georgia Court of Appeals has stated the following test:

 
If the employer has or assumes the right to control how the work shall be done, as distinguished from the mere right to require certain definite results in conformity to the contract, the relation is that of employer and servant rather than that of employer and independent contractor.
 
Employers Mutual Liability Insurance Co. v. Johnson, 104 Ga.App. 617, 122 S.E.2d 308, 309 (1961)

 Paragraph 9 of the lease agreement describes Crowder as an independent contractor. If a written contract describes a party as an independent contractor, it is presumed that he is as designated. American Family Life Assurance Co. v. Welch, 120 Ga.App. 334, 170 S.E.2d 703, 707 (1969). However, if other provisions of the agreement reveal that the employer has retained control over the time, manner and method of execution of the work, this ...


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