                     COURT OF APPEALS OF VIRGINIA


Present:    Judges Bray, Annunziata and Frank


UNINSURED EMPLOYER'S FUND
                                             MEMORANDUM OPINION*
v.   Record No. 0008-00-3                         PER CURIAM
                                                JUNE 20, 2000
HILLTOP LUMBER COMPANY, INC.,
 BITUMINOUS FIRE & MARINE INSURANCE COMPANY,
 ERNEST LUTHER SOWERS, III, and
 CALVIN T. ANGUS



           FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION

             (Mark L. Earley, Attorney General; John J.
             Beall, Jr., Senior Assistant Attorney
             General; Robert L. Walker, Assistant Attorney
             General, on briefs), for appellant.

             (S. Vernon Priddy, III; Sands, Anderson,
             Marks and Miller, on brief), for appellees
             Hilltop Lumber Company, Inc. and Bituminous
             Fire & Marine Insurance Company.

             No brief for appellees Ernest Luther
             Sowers, III and Calvin T. Angus.


     The Uninsured Employer's Fund (the Fund) contends that the

Workers' Compensation Commission (commission) erred in finding

that Hilltop Lumber Company, Inc. (Hilltop) was not the

statutory employer of Ernest Luther Sowers, III (claimant),

pursuant to either Code § 65.2-302(A) or Code § 65.2-302(B).

Upon reviewing the record and the briefs of the parties, we


     * Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
conclude that this appeal is without merit.   Accordingly, we

summarily affirm the commission's decision.    See Rule 5A:27. 1

     "'The issue whether a person is a statutory employee

presents a mixed question of law and fact . . . .'    Where, as

here, the facts relevant to the resolution of the . . . issue

are not in dispute, we must determine whether the [commission]

correctly applied the law to those facts."    Cinnamon v.

International Business Machines Corp., 238 Va. 471, 474, 384

S.E.2d 618, 619 (1989) (citation omitted).

     A review of the parties' briefs and the commission's

opinion shows that with respect to this issue, the material

facts are not in dispute.   Thus, this is a question of whether

the commission correctly applied the law to the facts.

     Hilltop operated a sawmill, but it did not have employees

who went into the woods to cut trees.   Hilltop entered into a

Timber Sale Agreement with Kenneth C. Howell ("the landowner").

The Timber Sale Agreement allowed Hilltop the rights to certain

trees on the landowner's property, but it did not obligate

Hilltop to harvest the trees.   Rather, it provided that Hilltop

would waive its right to cut the trees if they were not "cut and

removed on or before the First day of January 1998."




     1
       Because we summarily affirm the commission's decision, we
find it unnecessary to rule upon Hilltop's motion to dismiss and
decline to do so.


                                - 2 -
     Hilltop then entered into a Logging Contract and Agreement

with Calvin Angus wherein Angus agreed to "harvest all standing

timber" on the landowner's property, and it required that "[a]ll

logging must be completed by January 1, 1998."   The logging

contract provided various schedules of payment for cut logs

delivered to Hilltop and also the respective shares of payment

for other logs delivered to other mills "agreeable to both

parties."

     Claimant, an employee of Angus, suffered an injury by

accident arising out of and in the course of his employment,

when he was pinned under a skidder during logging operations on

the landowner's property.   Claimant filed a claim for benefits,

naming Angus as his employer.

     The commission found that claimant was an employee of

Angus, who was uninsured for workers' compensation.   The

commission also ruled that Hilltop was not claimant's statutory

employer.   The Fund appeals from that ruling.

                         Code § 65.2-302(A)

     Code § 65.2-302(A) provides as follows:

                 When any person (referred to in this
            section as "owner") undertakes to perform or
            execute any work which is a part of his
            trade, business or occupation and contracts
            with any other person (referred to in this
            section as "subcontractor") for the
            execution or performance by or under such
            subcontractor of the whole or any part of
            the work undertaken by such owner, the owner
            shall be liable to pay to any worker
            employed in the work any compensation under

                                - 3 -
           this title which he would have been liable
           to pay if the worker had been immediately
           employed by him.

     In ruling that Hilltop was not claimant's statutory

employer pursuant to Code § 65.2-302(A), the commission held

that the evidence failed to prove that Angus' business of

cutting the timber was part of Hilltop's trade, business, or

occupation.   The commission found that no evidence showed that

Hilltop, which received the logs and processed them into

manufactured timber, was ever involved in the cutting and

harvesting of the timber.

     In Shell Oil Co. v. Leftwich, 212 Va. 715, 187 S.E.2d 162

(1972), the Supreme Court set forth the test this Court must use

in determining whether claimant was engaged in Hilltop's trade,

business, or occupation:

                "[T]he test is not one of whether the
           subcontractor's activity is useful,
           necessary, or even absolutely indispensable
           to the statutory employer's business, since,
           after all, this could be said of practically
           any repair, construction or transportation
           service. The test (except in cases where
           the work is obviously a subcontracted
           fraction of a main contract) is whether this
           indispensable activity is, in the business,
           normally carried on through employees rather
           than independent contractors."

Id. at 722, 187 S.E.2d at 167 (citation omitted) (emphasis

added).   Here, credible evidence proved that Hilltop did not

have any employees who normally carried out the type of work

which caused claimant's injury, i.e., the cutting and harvesting


                               - 4 -
of standing timber.   This work, although necessary to Hilltop's

business, was done by independent contractors, such as Angus.

Therefore, the commission did not err in finding that Angus'

activity was not part of Hilltop's trade, business, or

occupation and that Hilltop was not claimant's statutory

employer pursuant to Code § 65.2-302(A).

                        Code § 65.2-302(B)

     Code § 65.2-302(B) provides as follows:

               When any person (referred to in this
          section as "contractor") contracts to
          perform or execute any work for another
          person which work or undertaking is not a
          part of the trade, business or occupation of
          such other person and contracts with any
          other person (referred to in this section as
          "subcontractor") for the execution or
          performance by or under the subcontractor of
          the whole or any part of the work undertaken
          by such contractor, then the contractor
          shall be liable to pay to any worker
          employed in the work any compensation under
          this title which he would have been liable
          to pay if that worker had been immediately
          employed by him.

     In F. Richard Wilton, Jr., Inc. v. Gibson, 22 Va. App. 606,

471 S.E.2d 832 (1996), we discussed the subcontracted-fraction

test and the method to be used to analyze statutory employer

status under Code § 65.2-302(B) as follows:

          "In the context of the construction
          business, [the subcontracted-fraction prong]
          relates to a general contractor, the party
          obligated by the main contract with the
          owner to complete the whole project. If the
          work out of which the accident arose was, in
          the language of Shell Oil, 'obviously a
          subcontracted fraction of [that] contract'

                               - 5 -
          and, in the language of the statute, 'not a
          part of the trade, business or occupation
          of' the owner, the general contractor who
          engaged the subcontractor to perform that
          fraction is the statutory employer of the
          injured worker, whether directly employed by
          the primary subcontractor or by a secondary
          subcontractor."

Id. at 610, 471 S.E.2d at 834-35 (quoting Cinnamon, 238 Va. at

476, 384 S.E.2d at 620).

     In holding Code § 65.2-302(B) inapplicable to this case,

the commission found as follows:

          Hilltop entered into a contract with a
          private landowner for timber rights. The
          landowner is not in the same trade, business
          or occupation as Hillside. There is no
          evidence that Hillside contracted to perform
          or execute any work for another person. All
          it purchased was land rights to cut timber.
          It could elect to cut the timber or not cut
          the timber with the rights reverting back to
          the landowner at the end of the contract
          period. We cannot find, based on the
          evidence, that Hilltop contracted to perform
          any work or undertaking for the owner.
          Hilltop sold the rights to cut this timber
          to Calvin Angus and agreed to pay for
          certain logs delivered at the rate of
          $120.00 per 1000 board feet. Other logs
          were paid per pound. Based on the evidence
          that the Hilltop was not in the trade,
          business or occupation of cutting logs, and
          the terms of the contract, we cannot find
          that § 65.2-302(B) is applicable in this
          case.

     Credible evidence supports the commission's findings.

Pursuant to the Timber Sale Agreement, Hilltop was not obligated

to the landowner to cut timber from the landowner's property.

Thus, because the work out of which the accident arose was not


                              - 6 -
an "obviously subcontracted fraction" of the Timber Sale

Agreement, the commission did not err in finding that Hilltop

was not claimant's statutory employer pursuant to Code

§ 65.2-302(B).

     For these reasons, we affirm the commission's decision.

                                                  Affirmed.




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