                                 NO. 89-014
                IN ?'HE SUPREME COURT OF THE STATE OF MONTANA
                                    1990



MARK ANDREWS ,
                 Claimant and Appella-nt,
         -vs-
FORD CONSTRUCTION, Employer,
       and
STATE FARM FIRE & CASUALTY CO.,
                 Defendant and Respondent.



                                                                        >>:
                                                                              W
APPEAL FROM:     The Workers ' Compensation Court, The ~onora'&e T M o t h y
                                                                  -r-

                 Reardon, Judge presiding.                    -i  rU




COITNSEL OF RECORD:
         For Appellant:
                 George H. Corn; Bell, Corn   &   Bell, Hamilton, Montana
         For Respondent:
                 Robert E. Sheridan; Garlinqton, Lohn     &   Robinson,
                 Missoula, Montana



                                    Submitted on Briefs:      Dec. 21, 1989
                                      Decided: February 5, 1990

Filed:
Justice John Conway Harrison delivered the Opinion of the Court.


     Andrews appeals a decision of the Workers' compensation Court
wherein it found that Andrews was not entitled to recover workers'
compensation benefits from Ford Construction.         We affirm.
     The sole issue presented for review is whether the Workers1
Compensation Court erred in holding that        §   39-71-405, MCA, is

inapplicable to this case because no contractual relationship
existed between appellant's employer, Gasvoda Construction Co., and
Ford.
     On September 22, 1983, appellant suffered an industrial
accident while working for Jay Gasvoda d/b/a Gasvoda Construction
Company (Gasvoda).     At the time Gasvoda was uninsured as his
workers' compensation insurance had lapsed two months prior due to
Gasvoda's failure to pay premiums.
     Both Ford and Gasvoda are construction contractors. Gasvoda's
business primarily consists of all types of excavation work.
Ford's primary business includes setting concrete forms, building
basements,   general    building       construction     and   setting-up
foundations, including trailer foundations.
     At the time of appellant's injury, Gasvoda was doing some
excavation work for Michael and Clarence Hendon on property they
owned near Victor, Montana.   The Hendons had hired Gasvoda to do
the excavation work necessary to place a double-wide mobile home
on the property.   The excavation work consisted of five specific
                                   2
items: (1) excavatingthe double-wide site; (2) installing 100 feet
of sewer line to the garage and house; (3) removal and installation
of a pressure system; (4) installing a 150-foot water line from
well to house; and (5) back filling after the concrete was set.
     After the Hendons hired Gasvoda, Gasvoda suggested to Ford
that he contact the Hendons about doing other work involved in the
project.    The Hendons hired Ford Construction to install the
concrete footings for the mobile home, and they informed Ford where
they wanted the mobile home located.     Gasvoda agreed to follow
Ford's specifications regarding excavating the foundation to ensure
fulfillment of the Hendons' wishes.   So, pursuant to the Hendons1
directions, Ford staked the location for the excavation and Ford
and Gasvoda worked together to establish the proper grade for the
foundation and concrete footings.
     No written agreement between Ford and Gasvoda existed for the
Hendon project.    The Hendons paid Ford and Gasvoda separately.
Charles Ford testified that he did not feel he could have fired
Gasvoda if he had thought Gasvoda was doing a poor job because Ford
had not hired Gasvoda.   Additionally, Ford never paid appellant's
wages nor was appellant ever on Ford's payroll.
     At issue in this case is 5 39-71-405, MCA, which provides as
follows:
                39-71-405.   Liability of employer who
           contracts work out.     (1) An employer who
           contracts with an independent contractor to
           have work performed of a kind which is a
           regular or a recurrent part of the work of the
           trade, business, occupation, or profession of
           such employer is liable for the payment of
           benefits under this chapter to the employees
          of the contractor if the contractor has not
          properly   complied     with   the    coverage
          requirements of the Worker's Compensation Act.
          Any insurer who becomes liable for payment of
          benefits may recover the amount of benefits
          paid and to be paid and necessary expenses
          from the contractor primarily liable therein.
                (2) Where an employer contracts to have
          any work to be done by a contractor other than
          an independent contractor, and the work so
          contracted to be done is a part or process in
          the trade or business of the employer, then
          the employer is liable to pay all benefits
          under this chapter to the same extent as if
          the work were done without the intervention of
          the contractor, and the work so contracted to
          be done shall not be construed to be casual
          employment. Where an employer contracts work
          to be done as specified in this subsection,
          the contractor and the contractor's employees
          shall come under that plan of compensation
          adopted by the employer.
               (3) Where an employer contracts any work
          to be done, wholly or in part for the
          employer, by an independent contractor, where
          the work so contracted to be done is casual
          employment as to such employer, then the
          contractor shall become the employer for the
          purposes of this chapter. (Emphasis added.)
     The Workers' Compensation Court found that the prerequisite
contractual relationship between Ford and Gasvoda did not exist.
In other words, Ford did not hire or contract with Gasvoda to work
on the Hendon project. Therefore, 5 39-71-405, MCA, did not apply
and appellant could not recover benefits from Ford.
     Because we are reviewing interpretation of a statute, the
standard of review is whether the Workers' Compensation Court's
interpretation of the law is correct. Wassberg v. Anaconda Copper
Co. (1985), 215 Mont. 309, 314, 697 P.2d 909, 912.    Upon review,
we find that the Workers' Compensation Court correctly determined
that 5 39-71-405, MCA, did not impose liability on Ford.
     Appellant argues that he is entitled to relief under        §   39-
71-405, MCA, because Ford acted as a prime contractor on the Hendon
project and Gasvoda was an uninsured subcontractor.             In his
argument, appellant relies heavily on the fact that Gasvoda agreed
to excavate the foundation site according to Ford's specifications
and that the two worked together to meet the specifications.
However, the inherent necessity that Ford and Gasvoda work together
on a particular aspect of the project so that the Hendons project
could be successfully completed does not elevate Ford to a prime
contractor.
     If Ford were the prime contractor for the Hendon project then
Ford would have been responsible for the entire project.       However,
the record clearly establishes that Ford's responsibility only
extended to placing the footings and pouring the concrete for the
mobile home's   foundation.    Although Ford and Gasvoda worked
together as necessary for Ford to carry-out Hendonsl instructions
regarding location of the mobile home, Ford was not involved with
the other work Gasvoda did for Hendons.            Ford simply did not
function as a prime contractor, rather both Gasvoda and Ford each
worked directly for the Hendons with each having responsibility for
separate jobs the Hendons wanted accomplished.
     In State Compensation Ins. Fund v. Castle Mountain Corp.
(1987), 227 Mont. 236, 239-240, 739 P.2d 461, 464, we discussed 5
39-71-405, MCA, in light of the purpose behind the statute.          We
quoted   the   following   statement   from   IC    Larson,   Workmenls
Compensation Law, 5 49.11 at 9-21 and 9-22:
              The purpose of this [llcontractor-underll
              statutes like 5 39-71-405, MCA] legislation
              was to protect em~loveesof irresponsible and
              uninsured subcontractors by imposinq ultimate
              liability on the ~resumablv responsible
                                                   -

              principal contractor, who has it within his
              power, in choosins subcontractors. to pass
              upon their responsibility and insist upon
              appropriate compensation ~rotectionfor their
              workers.   This being the rationale of the
              rule, in the increasingly common situation
              displaying   a    hierarchy   of    principal
              contractors upon subcontractors upon sub-
              subcontractors, if an employee of the lowest
              subcontractor on the totem pole is injured,
              there is no practical reason for reaching up
              the hierarchy any further than the first
              insured contractor. (Emphasis added.)
Although Gasvoda      qualifies as   I1irresponsible and uninsured,I1
nothing in the record leads to a conclusion that Ford had the
ability to choose Gasvoda for the Hendon job or that Ford could
control Gasvodalswork. To the contrary, Gasvoda chose Ford in the
sense that initially Gasvoda suggested to Ford that he contact
Hendons   .
     The plain language of   !
                             j   39-71-405, MCA, reflects the purpose
of 5 39-71-405, MCA, by incorporating the elements of choice and
control as necessary for imposing liability.         Each subsection
begins with the phrase llanemployer who contracts work out.I1 This
language describes an employer who hires subcontractors to do all
or some of the employerls work.      If Ford had hired or contracted
work out to Gasvoda, then Ford would have been in a position to
choose or hire Gasvoda initially.      Further, Ford would have been
in a position to exercise control over Gasvoda and insist that
Gasvoda carry workers1 compensation insurance.      However, because
no contractual relationship existed between Ford and Gasvoda, Ford
was never in a position to take any precautionary measures that
would further the purpose of the Workersf compensation Act which
is to   ffprovide for the protection of workers. If     Without a
contractual relationship, an insured contractor would be at risk
to the employees of any uninsured contractor working on the same
project without any means of control over the uninsured contractor.
Such a result would be unfair and would not promote the statute's
purpose which is to impose liability on employers who can take
affirmative action to protect workers.
     In sum, appellant fails to establish that Gasvoda and Ford
were anything other than two contractors hired by the Hendons to
work on the same project.     Section 39-71-405, MCA, requires a
contractual relationship to exist between an employer and an
uninsured subcontractor before liability for workersf compensation
benefits will be imposed on the employer.        Because no such
contractual relationship existed between Ford and Gasvoda, 5 39-
71-405, MCA, is inapplicable and appellant cannot recover benefits
from Ford Construction.
    Af finned.




We concur:              A




        Chief Justice
