9 FSM Intrm.048-055

An agency relationship is based upon consent by one person that another shall act in his behalf and be subject to his control. A principal is bound by, and liable for the acts of its agent if done with or within the actual or apparent authority from the principal and within the scope of the agent's employment. Sigrah v. Timothy, 9 FSM Intrm. 48, 52 (Kos. S. Ct. Tr. 1999).

When a general manager's actions in hiring, supervising and paying the employees of a sawmill were within the scope of authority granted to him by the principals, the sawmill's joint owners, the principals are bound by their agent's actions in hiring or authorizing the hiring of a sawmill employee. Sigrah v. Timothy, 9 FSM Intrm. 48, 52 (Kos. S. Ct. Tr. 1999).

The determination of an employee-employer relationship for tort liability purposes will not be based upon an employer. s decision on whether to report the persons as . employees. for the purposes of reporting Social Security contributions and FSM Income Tax deductions. Sigrah v. Timothy, 9 FSM Intrm. 48, 52 (Kos. S. Ct. Tr. 1999).

For the purposes of determining the employee status of an individual person for FSM Social Security contributions or for the FSM Income Tax law, the statutes look to the usual common law rules applicable in determining the employer-employee relationship. An employer includes any association or group employing any person. Employment means any service by an employee for the employer employing him, irrespective of where such employment is performed. Sigrah v. Timothy, 9 FSM Intrm. 48, 52 (Kos. S. Ct. Tr. 1999).

Under common law generally, "employment" includes any service performed for remuneration under any oral agreement of hire. To "employ" is to make use of the services of another, and to "be employed" means to perform a function under orders to do so. An "employee" is normally defined as a person in the service of another, through an agreement, which may be express, implied or verbal, and which gives the employer the right to control and direct the person in the way the work is to be performed. An employee performs services for an employer and is paid by the employer for those services. Sigrah v. Timothy, 9 FSM Intrm. 48, 52-53 (Kos. S. Ct. Tr. 1999).

If a person performed services at the defendants' sawmill and was paid compensation for his services by the defendants through their sawmill operations manager, who gave employees directions for the performance of labor, he was the defendants' employee under the common law rules for determining the employer-employee relationship for individuals. Sigrah v. Timothy, 9 FSM Intrm. 48, 53 (Kos. S. Ct. Tr. 1999).

Under the common law, there are only two reasons for distinguishing between agents of a principal who are "servants" or "employees" of the principal and agents who are independent contractors. The most common is to determine the principal's possible liability for torts of the agent within the scope of employment. The second purpose is to determine the obligations, rights and immunities between the principal and the agent. Sigrah v. Timothy, 9 FSM Intrm. 48, 53 (Kos. S. Ct. Tr. 1999).

Only when there is a duty of care, breach of this duty, damage caused by the breach, and determination of the value of the damage can there be a liability for negligence. A plaintiff must show that the defendants owed the plaintiff a duty of care, and that the defendants breached this duty. The plaintiff must also show that his injuries were caused by the breach and that a value can be assigned to his injuries. Sigrah v. Timothy, 9 FSM Intrm. 48, 53 (Kos. S. Ct. Tr. 1999).

An employer owes a duty of care toward its employee to see that the employee is properly educated about the operation of clearly dangerous machinery. An employer who recognizes the potential danger of a work situation, but who fails to take steps to reduce the danger or warn his employees of the danger is negligent. Sigrah v. Timothy, 9 FSM Intrm. 48, 53 (Kos. S. Ct. Tr. 1999).

Damages for a sawmill employee's lost wages will be awarded only for the time period that the sawmill remained in business. When there is no evidence regarding other type of work that the plaintiff did prior to his sawmill employment, the court will decline to award damages for other potential lost wages as being speculative. Sigrah v. Timothy, 9 FSM Intrm. 48, 54 (Kos. S. Ct. Tr. 1999).

Calculating the damages for pain and suffering is a difficult task because there are no fixed rules to aid in that determination, which lies in the sole discretion of the trier of fact. In determining pain and suffering, it is proper to consider not only past pain but future pain. It is also appropriate to consider loss of enjoyment of life as an element of pain and suffering. Sigrah v. Timothy, 9 FSM Intrm. 48, 54 (Kos. S. Ct. Tr. 1999).

The business name of the sawmill operations is Kosrae Timber Company. Kosrae Timber Company is jointly owned by Defendants Timothy Timothy and Morgan Jonas. Plaintiff began working at the sawmill in 1993. Tony Sison, who was the manager of the sawmill, authorized plaintiff's hiring and employment as a laborer. Plaintiff was also supervised by other sawmill employees, Joseph Mongkeya and BillMiller Robert. Plaintiff was paid compensation for his work for the sawmill, approximately $80.00 bi-weekly, in cash, by the manager, Tony Sison.

Plaintiff's tasks at the sawmill included both hauling logs and guiding logs for cutting operations. On the day of the accident, July 29, 1995, Plaintiff was hauling logs for the sawmill. Plaintiff's left hand was caught between the pulley and the wire cables on the sawmill's hauling truck. After the injury, Plaintiff was admitted to Kosrae State Hospital, where portions of his third, fourth and fifth fingers of his left hand were amputated by Dr. Rolando Austria. Plaintiff stayed at the hospital for more than one week after the surgery. He did not return to the sawmill to work after the accident and has not engaged in any other employment since the day of the accident.

While employed at Defendants' sawmill operations, Plaintiff was not given any training relating to operation of the machinery, including the pulley and cable system on the hauling truck or the sawmill machinery. Plaintiff was not given any training with respect to safe operation of the machinery nor any warnings. Plaintiff was not given any instructions before starting work at the sawmill, nor after he began working for the sawmill.

The Plaintiff was not reported as an "employee" on Defendants' Social Security Employer's Quarterly Tax Return for the first three quarters of 1995. The Plaintiff was also not reported as an "employee" on Defendants' FSM Employer's Income Tax Quarterly Withholding Return. The manager of the sawmill, Tony Sison, was also not reported as an "employee" on either the Defendants' Social Security or FSM Income Tax Quarterly Returns during 1995, 1996 or 1997. Other persons who performed work for the sawmill, BillMiller Robert and Joseph Mongkeya, were also not reported on the Defendants' Quarterly Returns. Defendants' Social Security, Income Tax and Gross Revenue Tax Quarterly Returns for the years 1995, 1996 and 1997 were received into evidence at trial. The last period of time for which income or wages for the sawmill were reported was for the period ending June 1997.

Two issues were presented during trial of this matter. First, whether the Plaintiff is an employee of the Defendants for the purposes of determining liability of the Defendants for Plaintiff's injuries? Second, if Plaintiff is determined to be an employee, whether Defendants are liable to Plaintiff for the injuries sustained on July 29, 1995? Each issue is addressed in turn below.

This matter was an action brought in negligence. Plaintiff argued that Defendants, as the employers, were responsible for Plaintiff's injuries. Defendants claimed that the Plaintiff was not an employee and therefore they were not liable for Plaintiff injuries. First, the issue of Plaintiff's employment status with the Defendants must be analyzed.

Tony Sison, manager of the sawmill, authorized plaintiff's employment at the sawmill. Tony Sison was hired by the Defendants to manage and operate the sawmill. Tony Sison served as agent for the Defendants in the operation of the sawmill. Tony was responsible for all operations of the sawmill, including hiring, directing and payment of compensation to the employees. An agency relationship is based upon consent by one person that another shall act in his behalf and be subject to his control. Bank of the FSM v. O'Sonis, 8 FSM Intrm. 67, 69 (Chk. 1997).

A principal is bound by, and liable for the acts of its agent if done with or within the actual or apparent authority from the principal and within the scope of the agent's employment. Id. Tony Sison's actions in hiring, supervising and paying the employees of the sawmill were within the scope of authority granted to him by the principals, the joint owners Defendants Timothy Timothy and Morgan Jonas. Mr. Sison's actions in hiring or authorizing the hiring of the Plaintiff to work for the sawmill operations were within Mr. Sison's scope of employment as the general manager of the sawmill. Plaintiff worked for the sawmill for approximately one and a half years before the date of his injury. Plaintiff worked not only hauling logs, but also at the cutting operations of the sawmill, all of which were under the management of Mr. Sison. Therefore, the principals, the Defendants, are bound by the actions of their agent, Mr. Sison in hiring or authorizing the hiring of Plaintiff as an employee of the sawmill.

Defendants argue that there was no record of Plaintiff. s employment on the Quarterly Reports submitted by Kosrae Timber Industries to the FSM Government. The fact that the Plaintiff's name does not appear on the reports merely shows that the Defendants did not report Plaintiff's employment for the purposes of Social Security contributions and FSM income tax deductions by the Defendants. The absence of Plaintiff's name from these Quarterly Reports is not conclusive on the employer-employee relationship for the purposes of determining an employer's responsibility towards its employees. The Court notes that the name of Tony Sison, the manager of the sawmill during relevant periods of time, also does not appear on any of the Quarterly Reports submitted to Social Security and the FSM Tax Office. Undisputed testimony from both Plaintiff's and Defendants' witness was presented that Tony Sison was employed by the Defendants as the general manager of the sawmill. Other persons who testified to be employees of the sawmill, BillMiller Robert and Joseph Mongkeya, also were not reported in the Quarterly Reports. The absence of Plaintiff's name from the Quarterly Reports to Social Security and the FSM Tax Office are not conclusive on the employee-employer relationship between the Plaintiff and Defendants. This Court is unwilling to allow determination of employee-employer relationship for tort liability purposes to be based upon an employer's decision on whether or not to report persons as "employees" for the purposes of reporting Social Security contributions and FSM Income Tax deductions.

For the purposes of determining the employee status of an individual person for FSM Social Security contributions, the statute looks to the common law rules applicable in determining the employer-employee relationship. 53 F.S.M.C. 103(7)(b). Likewise, the FSM Income Tax law also looks to the usual common law rules in determining the employer-employee relationship for individuals. 54 F.S.M.C. 112(3). An employer includes any association or group employing any person. 54 F.S.M.C. 112(4). Employment means any service by an employee for the employer employing him, irrespective of where such employment is performed. 53 F.S.M.C. 103(8).

Under common law generally, employment includes any service performed for remuneration under any oral agreement of hire. To employ is to make use of the services of another, and to be employed means to perform a function under orders to do so. An "employee" is normally defined as a person in the service of another, through an agreement, which may be express, implied or verbal, and which gives the employer the right to control and direct the person in the way the work is to be performed. An employee performs services for an employer and is paid by the employer for those

In this case, Plaintiff performed services at the sawmill for the Defendants. Plaintiff was paid compensation for his services by the Defendants, through their sawmill operations manager, Tony Sison. Mr. Sison was the manager of the sawmill and directed its operations, and gave directions to employees for the performance of labor, including hauling logs and other tasks. Under the common law rules in determining the employer-employee relationship for individuals, Plaintiff was an employee of the Defendants prior to and on the date of the injury.

Under the common law there are only two reasons for distinguishing between agents of a principal who are "servants" or "employees" of the principal and agents who are independent contractors. The most common is to determine the possible liability of the principal for torts of the agent within the scope of employment. The second purpose is to determine the obligations, rights and immunities between the principal and the agent. Rauzi v. FSM, 2 FSM Intrm. 8, 15 (Pon. 1985). Under the facts of this case, Plaintiff was an employee of the principals, Timothy Timothy and Morgan Jonas.

Defendant argued that the cases of Suldan v. FSM, 1 FSM Intrm. 339 (Pon. 1983) and Alik v. Kosrae Hotel Corp., 5 FSM Intrm. 294 (Kos. 1992) apply to this case to determine Plaintiff's employment status. The Suldan case addressed a plaintiff's right to continued employment with the FSM National government. Likewise, Alik addressed an employee's right to continued employment with a private employer. Plaintiff's right to continued employment with the sawmill is not at issue. Therefore, Suldan and Alik are not applicable to the issues presented here.

Only when there is a duty of care, breach of this duty, damage caused by the breach, and determination of the value of the damage can there be a liability for negligence. Nena v. Kosrae, 5 FSM Intrm. 417, 420 (Kos. S. Ct. Tr. 1990). Plaintiff must show that the Defendants owed Plaintiff a duty of care, and that this duty was breached by the Defendants. Plaintiff must also show that his injuries were caused by the breach and that value can be assigned to Plaintiff's injuries. The common law definition of negligence includes the failure to use such care as a reasonably prudent person would use in a similar situation. Koike v. Ponape Rock Products, Inc., 3 FSM Intrm. 57, 66 (Pon. S. Ct. Tr. 1986).

Defendants' duty to Plaintiff in this case are that of an employer to an employee. There are several reported cases in the FSM which have addressed the issue of the responsibility of an employer to his employee. An employer owes a duty of care toward its employee to see that the employee is properly educated about the operation of clearly dangerous machinery. Fabian v. Ting Hong Oceanic Enterprises, 8 FSM Intrm. 63, 65 (Chk. 1997). An employer who recognizes the potential danger of a work situation, but who fails to take steps to reduce the danger or warn his employees of the danger is guilty of nonfeasance and negligence. Id. Here, the pulley and cable wire system on the hauling truck of the sawmill was clearly dangerous and had the potential to cause serious injuries if not operated properly.

18 months when the injury occurred, yet Plaintiff received no training or education regarding the sawmill's activities or operation of its machinery. Plaintiff received no training before or after he began using the sawmill's equipment. Defendants breached their duty of care to the Plaintiff by failing to provide any training or instruction regarding proper and safe operation of dangerous machinery used for sawmill operations.

Plaintiff provided evidence regarding the injuries sustained as a result of the accident sustained on July 29, 1995 at the sawmill. Plaintiff demonstrated his injured hand to the Court. Plaintiff has permanently lost a portion of his left hand, through amputation of part of his third, fourth and fifth fingers. Plaintiff was a patient at the Kosrae State Hospital for more than one week following surgery and other medical treatment. The injuries suffered by the Plaintiff during use of the pulley and wire cable system were caused by Defendants' breach of their duty of care to the Plaintiff.

Defendant's quarterly tax returns showed income and wages for 1995, 1996, and the period ending June 1997. The quarterly returns for the period from June 1997 through December 1997 showed no income for the sawmill and no wages paid to employees. The Court infers from this evidence, that the sawmill ceased operations sometime during the second quarter of 1997, before July 1, 1997. No wages or income are reported after June 30, 1997, therefore the Court concludes that Plaintiff would not have been employed at the sawmill after June 30, 1997. There was no evidence presented regarding other type of work that the Plaintiff was employed at prior to his employment at the sawmill. Therefore, the Court declines to consider other potential lost wages as being speculative.

Based upon the sawmill's apparent stoppage of operations, damages for lost wages are awarded for the time period when the sawmill was in operation after Plaintiff's date of injury, or from August 1995 through June 1997. This is the time period within which Plaintiff could have continued to be employed at the sawmill, had the injury not occurred. Plaintiff's compensation rate was $80 bi-weekly or $2,080 per annum. Lost wages from the time period beginning August 1995 through the end of June 1997 equals one year ($2,080) and 11 months ($1,907). Total damages for Plaintiff's lost wages are awarded at $3,987.

Plaintiff is also entitled to damages for pain and suffering. Calculating the damages for pain and suffering is a difficult task because there are no fixed rules to aid in that determination, which lies in the sole discretion of the trier of fact. Fabian, 8 FSM Intrm. at 66-67. There are several items which have been carefully considered in determining the amount of damages awarded for pain and suffering. The Court has also carefully considered other FSM cases involving awards of damages for personal injuries, especially the case of Fabian v. Ting Hong Oceanic Enterprises.

In determining pain and suffering, it is proper to consider not only past pain but future pain. It is also appropriate to consider loss of enjoyment of life as an element of pain and suffering. Id. The Plaintiff suffered the injuries more than three years ago, and testified regarding the impact of the injury on his lifestyle. Plaintiff testified that while he played guitar before the accident, he cannot ever play

guitar again. Plaintiff also testified that he cannot properly grab things with his left hand. The permanent injuries suffered by the Plaintiff will limit his employment opportunities as a laborer for the rest of his life. These permanent injuries will also limit Plaintiff's participation in traditional activities such as climbing trees and fishing. The damages suffered by the Plaintiff for pain and suffering amount to $20,000.