IN THE WORKERS' COMPENSATION COURT OF THE STATE OF MONTANA

WCC No. 9611-7648

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R. ZIMMERMAN, INOCO INCORPORATED/
BIG Z TRUCKING/ZIMMERMAN TRADING COMPANY

Appellants

vs.

UNINSURED EMPLOYERS' FUND/

STATE COMPENSATION INSURANCE FUND

Respondents.

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ORDER ON APPEAL

Summary: Trucking company appealed decision of the Department of Labor and Industry finding it did not have workers' compensation insurance for a specific period and assessing a penalty of $14,659.86. In addition to arguing that it should not have been governed by the Montana Workers' Compensation Act, the trucking company argued it did in fact have a workers' compensation policy through the Montana State Compensation Insurance Fund, which was issued in another name, but allegedly for the same company.

Held: To the extent the Department of Labor's order assessed a penalty against the individual owner, the decision below is reversed. The hearing officer's decision did not find reasons to ignore the protections against individual liability afforded through incorporation under Montana law. While evidence indicated several associated companies, one of which may have had a policy with State Fund, there was only one company employing the individuals in question during the time period at issue. The "new" policy with State Fund had not been purchased to cover those individuals, who had been employed previously. Under 39-71-118, MCA (1993), the individuals in question were employees for whom the employer should have purchased Montana workers' compensation insurance where they were residents of Montana and their work was controlled from Montana. The penalty assessment against the corporate entities is upheld.

Topics:

This is an appeal from a decision of the Montana Department of Labor and Industry (Department) determining that the appellants did not have workers' compensation insurance, as required by law, for the period December 21, 1992 to May 2, 1994. Based on that determination, the Department assessed a penalty against appellants in the amount of $14,659.86. Appellants disagreed with the determination and sought judicial review by this Court. After carefully reviewing the record below, this Court affirms the decision of the Department with respect to the Montana corporation known as Inoco, Inc., which was formerly known as Big Z, Inc. Insofar as the decision below may purport to impose joint or several liability for the penalty upon Robert Zimmerman and Zimmerman Trading Company, it is reversed.

Factual Background

A. Big Z Inc.

Robert Zimmerman operates a number of businesses. As pertains to this case, the evidence shows that he is the principal shareholder of a Montana corporation incorporated in 1982 as Roosevelt Disposal, Inc. (Tr. at 16.) In 1986 the corporate name was changed to Big Z, Inc. (id.) which shall hereafter be referred to as "Montana Big Z." In October 1993 the Montana corporation again changed its name, this time to Inoco, Inc., by which name it continues to be known. While there was some initial confusion of names during the hearing below, it is clear that Montana Big Z and Inoco are the same corporation. The different names were used during different time periods. For convenience, the Court will refer to the corporation as "Montana Big Z." (Id. at 16, 22.)

Montana Big Z is a trucking company. In 1991 the company employed 68 truck drivers and had a payroll in excess of $250,000. (Uninsured Employers Fund [UEF] Ex. B at 15.)

In early 1992 Zimmerman incorporated a second, separate corporation in the State of Utah using the name "Big Z, Inc." (Tr. at 17.) To avoid confusing the two corporations, the Utah company will be referred to as "Utah Big Z."

Utah Big Z listed its office in Salt Lake City. (See UEF Ex. G at 1-3.) Like Montana Big Z, it was a trucking company. (Tr. at 18; UEF Ex. G.) It operated refrigerated trucks.⁽¹⁾ (Tr. at 21.) The operation was short-lived and Utah Big Z was sold in August 1992. (Id. at 18.)

Following Utah Big Z's cessation of business in August 1992, Montana Big Z did business in Utah. That business primarily involved trucking oil from refinery sites in Utah to construction projects in Utah, although a handful of loads were hauled in Montana and Wyoming. Montana Big Z conducted trucking operations in Utah throughout 1993.

B. Montana Policies Covering Montana Big Z.

Montana Big Z obtained workers' compensation insurance through the Montana State Compensation Insurance Fund on January 24, 1987.⁽²⁾ (State Fund [SF] Ex. 4.) That policy was canceled on December 21, 1992, for non-payment of premium. (SF Ex. 7.) Montana Big Z was thereafter uninsured until May 3, 1994, when it reinsured with the State Fund under its new name, Inoco, Inc. (UEF Ex. F at 10.) Thus, between December 21, 1992 and May 3, 1994, Montana Big Z lacked Montana workers' compensation insurance coverage.

C. Utah Coverage.

"Big Z, Inc." was covered by the Utah State Compensation Fund for the period March 28, 1992 to September 16, 1994. (UEF Ex. C at 5; Inoco Ex. 1 at 1-2.) Which Big Z was covered -- Montana Big Z or Utah Big Z -- is debatable. The initial application to the Utah Fund listed a Salt Lake City office for the corporation, which suggests that Utah Big Z was to be the insured. The office address was changed in April 1993 at the request of the bookkeeper for Zimmerman's various businesses. She wrote on the April Utah Fund billing, "Please change my address." (UEF Ex. G at 4.) She then wrote in the Billings address used by various Zimmerman businesses, including Montana Big Z. (Id.) Later on, at least by November 1993, the Utah Fund was notified that the name of the corporation had been changed to Inoco, Inc.

Kim Aaberg was hired as Big Z's bookkeeper in February 1992. (Tr. at 41-42) In April 1992 she was transferred to the payroll of Zimmerman Trading Company but continued to do the bookkeeping for Big Z. She also dispatched Montana Big Z truckers in 1993 (id. at 22-23) and prepared workers' compensation information submitted to the Utah Fund. (Id. at 31; Inoco Ex. 2.)

During 1992 and 1993, Aaberg was unaware of the fact that there were two Big Z corporations. (Tr. at 59.) Aaberg testified:

(Id.)

If the Utah policy was intended to, and in fact, covered Utah Big Z, then Montana Big Z had no coverage either in Utah or Montana between December 21, 1992 to May 3, 1994. The record contains no information indicating that the Utah Fund ever addressed the matter, or was ever even aware there were two different corporations. (UEF Ex. C at 5-6). Neither the UEF nor the State Fund has contended that Montana Big Z was uninsured in Utah, so the matter is academic.

D. Wesley Long's Accident and Workers' Compensation Claim.

On September 1, 1993, Wesley Long (Long) was injured in a truck accident in Utah. At the time of the accident he was driving a truck for Montana Big Z. (Utah Big Z had ceased to exist more than a year prior to the accident.) Long was being paid by Montana Big Z and his wages were being reported for unemployment and workers' compensation purposes by Montana Big Z. (UEF Ex. G at 19.)

Long submitted a claim for compensation to the Utah Fund. The Utah Fund initiated benefits pending further investigation. (UEF Ex. C at 1.) After investigation, the Utah Fund denied liability for the claim, finding that Long was not a Utah employee. (Id. at 5-6.) In a January 6, 1995 letter to Long's attorney, the Utah Fund listed its reasons for determining that Long was not a Utah employee. According to the letter:

(Id. at 7-8.)

E. The Montana UEF Audit and Penalty.

Following denial of Long's claim by the Utah Fund, Long sought workers' compensation benefits in Montana. Since there was no Montana coverage, the Montana UEF accepted liability for the claim. That acceptance triggered an audit of Big Z.

An audit was conducted by both the UEF and the Unemployment Insurance Division (UI) of the Department. During the course of the audit, the auditors obtained wage and other information pertaining to Big Z, as well as another Zimmerman owned company known as Zimmerman Trading Company. The Big Z information was not delineated as between Utah Big Z or Montana Big Z, and indeed none of the filings submitted by Big Z ever distinguished between the two corporations.

As a result of its audit, the UEF determined that between December 21, 1992 and May 2, 1994, Montana Big Z paid $29,722.89 in wages. (UEF Ex. A at 6.) The wages were for five employees: Long, Joel Sparrow, Scott Johnstone, Loren Stern, and Martin Comber. (Tr. at 94; UEF Ex. A at 6.) Based on documentary evidence, the UEF auditor determined that all five employees were Montana residents. She further determined that Montana Big Z was uninsured in Montana and assessed a penalty in the amount of $14,659.86, which is double the amount of the premium Montana Big Z would have paid for Montana coverage during the audit period. (Id. at 5)

The calculation of wages was based on wages Big Z reported to the Utah Uninsurance Division for 1993, on W-2 and W-3 statements for 1993 and the first quarter of 1994, and on payroll checks from Big Z to its employees for the period April 1, 1994 to May 1, 1994. (UEF Ex. B at 6-9.) Copies of payroll checks or ledgers were not introduced at hearing. However, the wage figures determined by the UEF are corroborated in significant part by independent documentation from the Utah State Fund and the Utah Unemployment Insurance Division. (UEF Exs. G; Inoco Exs. 2 and 3.) The Utah Fund information shows that Big Z reported wages of $21,576.29 for the calendar year 1993. (UEF Ex. G at 6.) The Utah unemployment insurance reports for the fourth quarter of 1992 and the second and fourth quarters of 1993 show wages of $18,107.35 for the three quarters. The appellant did not offer evidence disputing the accuracy of the wages calculated by the auditor.⁽³⁾

F. Residency.

UEF's determination concerning the residency of the five Big Z employees was based on the addresses Big Z listed for the five drivers, unemployment insurance records, and the determination concerning Long's residence. In her report, the UEF auditor stated in relevant part:

(UEF Ex. A at 2.) The Court notes that the auditor requested other information from Zimmerman and Montana Big Z that would have assisted her in making her residency determination.⁽⁴⁾ (Id.) Zimmerman and Montana Big Z did not comply with her request for specific information concerning the drivers. (UEF Ex. D at 6.) Indeed, Zimmerman and Montana Big Z did not cooperate with other requests made by the UEF and UI's auditors during their audits. (Id. at 5-6; H at 2.) Similarly, at hearing, Zimmerman and Montana Big Z presented their case through a bookkeeper who testified based on hearsay and her review of certain company records. Zimmerman and Montana Big Z failed to produce Montana Big Z's records. Written inquiries sent by the auditors to the drivers were also ignored.⁽⁵⁾ (UEF Ex. D at 10-15.)

The evidence pertaining to Long's residency is set forth in the Utah Fund letter denying liability and in other information furnished with respect to previous unemployment claims he had made in Montana, as follows:

(UEF Ex. B at 1; 6 C at 7.) Kim Aaberg also testified that while claimant was working in Utah he lived in his truck and never rented an apartment or house in Utah. (Tr. at 25.) While this testimony was clearly based on hearsay or speculation,⁽⁶⁾ the evidence was solicited by appellant and is not challenged on appeal. The final piece of evidence concerning Long was Montana Big Z's own listing of Long as having a Montana address.

As to the other four employees working for Montana Big Z between December 21, 1992 and May 3, 1994, the evidence of residency was as follows:

In August 1993 Sparrow applied in Montana for unemployment benefits. He listed his address as 2107 Harnish Road, which is the same address for Montana Big Z. (Id. at 9.)

Montana wages were reported by Montana Big Z to Montana UI for Scott Johnstone for the second quarter of 1994. Another employer reported Montana UI wages for Johnstone during the second, third and fourth quarters of 1994 and the first quarter of 1995. (Id. at 3.)

Montana wages were reported by Montana Big Z to Montana UI for Martin Comber for the second, third and fourth quarters of 1994. Another employer reported Montana wages for Comber during the fourth quarter of 1994 and the first quarter of 1995. (Id. at 2.)

• All five employees were listed by Montana Big Z as having Montana addresses. (UEF Ex. A at 2.)

G. Zimmerman Trading Company Policy of Insurance.

Montana Big Z did not have its own Montana workers' compensation insurance policy between December 21, 1992 and May 3, 1994. However, as a fall-back position, it asserted in the proceeding below, and asserts on appeal, that a Montana policy covering Zimmerman Trading Company should be construed as covering Montana Big Z.

Kim Aaberg was allowed to testify at hearing that, according to Zimmerman's accountant, Zimmerman Trading Company is a subsidiary of Montana Big Z. (Tr. at 16-17.) Later she testified, "According to the accountant, Zimmerman Trading has whatever INOCO has." (Id. at 78.) With regard to Montana Big Z and Zimmerman Trading, the accountant also told UEF auditor that "there wasn't a sole proprietorship and the taxes for all the businesses were filed under a single corporate entity." (UEF Ex. A at 4.) Zimmerman Trading did have a policy of insurance for the time frame at issue. (SF Ex. 4.)

Notwithstanding the accountant's statements to Aaberg and the auditor, the applications for insurance and reports filed by Zimmerman Trading and Montana Big Z show that they were separate entities. Zimmerman Trading and Montana Big Z filed separate UI and withholding tax reports. (UEF Ex. H at 1.) Truck drivers for Montana Big Z were listed on Montana Big Z reports. Montana Big Z drivers were paid from a Montana Big Z payroll account. (UEF Ex. A at 7-12.) While one Utah insurance premium was paid from a Zimmerman Trading account, there is no indication that Zimmerman Trading paid other premiums or any of the wages of the Montana Big Z driver.⁽⁷⁾ There were two different employer identification numbers, although both numbers were used by both entities at one time or another without any apparent logic or reason. (See Tr. at 71.)

Zimmerman Trading's applications for workers' compensation insurance are the most telling items of evidence with respect to the contention that Zimmerman Trading and Montana Big Z were/are one and the same. The applications were made to the State Fund, which issued policies of insurance based on the applications. The applications are set forth in State Fund's Exhibit 4.

The first application was made on April 7, 1992, at the same time Utah Big Z was operating reefer trucks in Utah. The application was signed by Robert Zimmerman. The application stated the applicant's name as "Zimmerman Trading Company." It stated that the company was a "New business" and had never been previously insured by the State Fund. When asked if the company was a subsidiary of another entity or if it had subsidiaries, the "NO" box was checked. The application further stated that the business was a "Sole Proprietorship." The application described the business as: "Brokerage of produce, farm commodity & petroleum by-products, salt water and transportation thereof when necessary; elevator bean sacking." (Inoco Ex. 4 at 4-5.) As potential employees, it listed brokers with estimated earnings of $20,000, "elevator sacking" with estimated earnings of $15,000 and "Trucking - occasional" with estimated earnings of $10,000. (Id. at 6.) State Fund premium statements found at UEF's Exhibit F show that between April 1992 and August 1, 1994, Zimmerman Trading reported truck driver wages as zero.

Zimmerman Trading submitted a second application to the State Fund on September 26, 1994, apparently after the first policy lapsed. As in the first application, it stated that the company was a sole proprietorship. It listed potential employees as "Farm or Ranch," "Trucking", and "Clerical." However, it listed wages for farm and ranch and trucking as zero. The only estimated earnings reported were for "clerical" services. (Id. at 14.)

Proceedings and Decision Below

The UEF auditor's decision to impose a penalty was made on November 17, 1995. (UEF Ex. A.) Appellant requested a contested case hearing on November 29, 1995. (Department File.) A contested case hearing was held on August 21 and 22, 1996. On October 29, 1996, the Department's hearing officer issued his Findings of Fact; Conclusions of Law; and Order. The next day, October 30, 1996, he issued Findings of Fact; Conclusions of Law; and order Amended to Correct "Appellant" Reference Errors. The latter was issued because in some places in the original decision the hearing officer referred to appellant as "respondent" rather than "appellant."

In his decision, the hearing officer found that Long was a Montana resident⁽⁸⁾ and controlled by Montana Big Z from Montana. He further found that the Zimmerman Trading Company policy issued by the State Fund did not cover Big Z and that Big Z was uninsured during the period for which the penalty was imposed. Finally, he affirmed the proposed penalty of $14,659.86.

This appeal by appellant followed on November 7, 1996. Briefing was completed on June 4, 1997, at which time the appeal was deemed submitted for decision.

Issues On Appeal

In its brief on appeal, the appellant states the issues as follows:

(Appellants' Brief at 2.)

Appellants' statement of the issues is unsatisfactory. The issue raised in this case is not whether Long's claim is compensable in Montana, although that issue certainly underlies the ultimate issue, but whether the penalty assessed against the appellant is proper. The Court therefore restates the issue on appeal as follows:

Jurisdiction

The Department's jurisdiction to impose a penalty against an uninsured employer is set forth in the Montana Workers' Compensation Act at section 39-71-504, MCA, which sets forth the manner of funding for the Uninsured Employers' Fund. The law in effect at the time of the injury governs. Buckman v. Montana Deaconess Hospital, 224 Mont. 318, 730 P.2d 380 (1986). Thus, the 1991-1993 version of the Workers' Compensation Act governs. The section provides in relevant part:

The [uninsured] fund is funded in the following manner:

This Court's jurisdiction to judicially review a decision of the Department to impose a penalty is set forth in section 39-71-2401, MCA (1991), which provides in relevant part:

Since the penalty imposed in this case arises under chapter 71 of Title 39, the appeal from the Department's decision was properly filed in this Court.

Standard of Review

The Workers' Compensation Act does not set forth standards of review for appeals. Therefore, judicial review is governed by the Montana Administrative Procedure Act, which provides:

Under the clearly erroneous standard of subsection (2)(a)(v), the hearing officer's findings of fact may be overturned on judicial review only where they are "clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record." State Compensation Mutual Ins. Fund v. Lee Rost Logging, 252 Mont. 97, 102, 827 P.2d 85, 88 (1992) (citing 2-4-702(a)(v), MCA). The Court may not reweigh the evidence, rather the findings of fact must be upheld if they are supported by substantial, credible evidence in the record. Nelson v. EBI Orion Group, 252 Mont. 286, 289, 829 P.2d 1, 3 (1992). The scope of review with respect to conclusions of law is broader. The conclusions must be examined to determine if they are correct. Steer, Inc. v. Department of Revenue, 245 Mont. 470, 474, 803 P.2d 601, 603 (1990).

Discussion

The amount of the penalty imposed in this case is not at issue. What is at issue is whether the penalty should be imposed at all. Appellant argues that Long was a Utah resident working in Utah and therefore exempt from Montana workers' compensation requirements. It has ignored the residency of its other drivers. Secondarily, appellant argues that if it was required to have Montana workers' compensation coverage for its employees, then it in fact had such coverage under the State Fund policy covering Zimmerman Trading Company. The UEF joins in the second argument. After some initial comments, I will address both arguments.

I. The Record Below.

As an initial matter, this Court found it frustrating to review the record below.

As reflected in the auditor's records and report, the appellant was uncooperative in the audit process and never did provide some of the information requested by the auditor. At hearing, the appellant presented its case through a bookkeeper whose testimony was based on secondhand knowledge and rank hearsay. She was allowed to testify, in effect, that the appellant's accountant said that Big Z and Zimmerman Trading were one and the same company. The accountant was never called as a witness, and therefore never subjected to cross-examination concerning his statement. His statement in any event amounted to no more than an opinion, and a questionable one at that since the legal status of business entities is usually a matter of law.

The bookkeeper was also permitted to testify concerning log sheets for loads driven by Long without appellant ever producing or disclosing the actual records to the other parties or the hearing officer. Appellant thereby circumvented the requirement that it provide the other parties with its exhibits prior to trial and prevented the opposing parties from effective cross-examination concerning the information contained in the logs.

Evidence concerning corporate entities was also offered through the bookkeeper. She was permitted to testify as to corporate status based on her review of corporate books and what she was told by others. Neither the originals nor copies of incorporation papers or other corporate documents were ever produced. Moreover, during the period of time covered by the penalty, she was unaware of Utah Big Z, nevertheless she was permitted to testify concerning its legal status, its period of operation, and its ultimate sale.

The review of the record has also been complicated by the state of the exhibits. Some of the exhibits were poor copies of originals and virtually unreadable.

Nonetheless, none of the parties has challenged the evidentiary rulings made at hearing or the record on which the ultimate decision was made. This Court must therefore accept the record presented to it and decide the case based on that record.

II. Who is the Appellant?

Also troubling in this appeal is the disregard of the entity responsible for the penalty. The auditor listed the employer as "Robert Zimmerman" with a d/b/a of "Big Z/Inoco Inc." (UEF Ex. A.) The decision below is captioned" R. Zimmerman, Inoco Inc.,/Big Z Trucking/Zimmerman Trading Company." They are all lumped together. In imposing the penalty, no distinction was made between Zimmerman, the individual, and the corporation in which Zimmerman is a shareholder.

Corporations are legal entities under Montana law. Incorporation insulates shareholders, officers and directors from personal liability for the corporation's obligations; yet, the auditor, the hearing officer, and the parties themselves seemingly disregarded the fact that Montana Big Z is a corporation. While the limitation of liability statutorily afforded a corporation may be disregarded in instances where corporate formalities are ignored, the decision below did not consider or address the facts necessary to impose individual liability on Zimmerman. Therefore, there is no basis for imposing individual liability upon Robert Zimmerman. The penalty must be limited to Montana Big Z, now known as Inoco, Inc.

III. The State Fund as Insurer for Big Z.

Appellant's argument that Montana Big Z was insured by the State Fund is a fall back position for Big Z. While the UEF lends its considerable support for the argument, the argument has no merit whatsoever and warrants only brief discussion.

The argument is based on an insurance policy issued by the State Fund for Zimmerman Trading Company. The applications for insurance on their face are dispositive of any contention that the policy was intended to cover Montana Big Z. The applications stated that Zimmerman Trading Company was a sole proprietorship. The initial application indicated that Zimmerman Trading Company was a "new business" and had never been insured by the State Fund. Those statements are utterly inconsistent with the fact that Montana Big Z had been in business for a number of years and previously been insured by the State Fund. Montana Big Z was a corporation, not a sole proprietorship. Moreover, the reporting of truck drivers' wages contradicts the contention. Zimmerman Trading never reported wages for the truck drivers whose wages form the basis for the penalty; Montana Big Z -- the corporation -- did.

IV. The Penalty -- Applicability of Montana Insurance Requirements.

The Montana Workers' Compensation Act requires that all employers subject to the Act provide workers' compensation insurance coverage for their employees. Section 39-71-401, MCA (1991), provides in relevant part:

As set forth in the section, the insurance requirement applies to employers "as defined by 39-71-117" and to employees "as defined in 39-71-118." Thus, to determine whether Montana Big Z was uninsured, we must determine whether Montana Big Z was an "employer" within the meaning of the Montana Workers' Compensation Act and whether its truck drivers were "employees" within the meaning of the Act.

Employer is defined in section 39-71- 117, MCA (1993)⁽⁹⁾, as follows:

Substantial, uncontradicted evidence shows that Montana Big Z is a private, Montana corporation and that it employed drivers between December 21, 1992 and May 2, 1994. It was thus an employer as defined in subsection (1)(a). Assuming that Montana Big Z is an "interstate or intrastate common or contract motor carrier," it was not exempt from Montana coverage requirements since the conditions set out in subsection (4) were not met. There is no evidence indicating that the drivers were certified as independent contractors; there is no evidence that the drivers were furnished by another company which had Montana coverage applicable for the drivers; and Utah Big Z had no Montana workers' compensation policy.

The determination as to whether Montana Big Z's employees are subject to the Montana Workers' Compensation Act is governed by section 39-71-118, MCA (1993)⁽¹⁰⁾, which defines "employee" for purposes of the Act. The section provides in relevant part:

The hearing officer found that Long was a resident of Montana and that his work was controlled by Big Z from Montana; therefore, he met the criteria of subsection (a). No express finding was made with regard to the other four Montana Big Z employees, but in imposing the full amount of the penalty the hearing officer implicitly held that the other employees were also Montana residents controlled by Big Z from Montana.

With respect to the four drivers other than Long, the only evidence offered at hearing indicated they were Montana residents and that Big Z controlled their activities from Montana. All four were listed by Montana Big Z as Montana residents. Some had previously filed unemployment claims in Montana and worked for other Montana employers. No evidence was offered to show that any of the four drivers resided other than in Montana. As to control, Montana Big Z had no terminal or office in Utah during the penalty period and uncontradicted evidence showed that its operations were conducted from Billings, Montana. Thus, even if the hearing officer erred when he failed to make an express finding as to those drivers, the error is harmless -- he could have reached no other conclusion.

With respect to Long, the hearing officer's finding was supported by substantial evidence. The rules for determining residence are set out in section 1-1-215, MCA. The section is part of a chapter which sets out definitions of general applicability and must be applied here since there is no definition of "residence" within the Workers' Compensation Act. See SJL of Montana Associates Ltd. Partnership v. City of Billings, 263 Mont. 142, 147, 867 P.2d 1084, 1087 (1993) ("[W]hen a word is defined in the code, that definition is applicable to other parts of the code except where the contrary is plainly indicated.").

Section 1-1-215, MCA (1995), provides:

As set forth in subsection (1), the fact that Long was working in Utah is not determinative. Therefore, other indicators of residency must be considered.

The other indicators include the following facts:

These facts show that prior to driving in Utah, Long was a Montana resident. There is no evidence that his residency was anywhere else. As to the contention that Long established Utah residency, subsection (3) of section 1-1-215, MCA, provides that he remained a Montana resident until and unless he "gained" a residence in Utah, while subsection (6) requires proof that Long intended to change his residence to Utah. The evidence is inconsistent with any finding that Long intended to change his residence to Utah, rather it shows that he continued to consider himself a Montana resident temporarily away from home. The hearing officer correctly determined that Long was a Montana resident during the penalty period.

*.* * * *

The decision below is affirmed except to the extent that it imposes the penalty against any entity other than Montana Big Z (Inoco).

DATED in Helena, Montana, this 23rd day of October, 1997.

(SEAL)

\s\ Mike McCarter
JUDGE

c: Mr. Donald R. Herndon
Mr. Daniel B. McGregor
Ms. Susan C. Witte
Ms. Christine L. Noland
Ms. Anne L. MacIntyre -- E-mailed
Submitted: June 4, 1997

1. Testimony indicated that the company's truck drivers were "reefer" drivers and that it had a "reefer" division. "Reefer" is a slang term for a refrigerated railroad car or refrigerated semi-trailer. American Heritage Dictionary, 3^rd edition, 1993.

2. Its predecessor, Roosevelt Disposal, Inc., had been insured by the State Fund from 1984 to 1986.

3. Additional wages were reported by Montana Big Z to the State of North Dakota in 1994 and to the State of Wyoming for the fourth quarter of 1993. Those wages were reported to North Dakota under the name of "Interstar/Inoco, Inc." (UEF Ex. G at 21-27.) They were reported to Wyoming under the name Inoco, Inc. (Id. at 28.) As previously stated, Inoco, Inc., is the name Montana Big Z adopted in October 1993. According to Kim Aaberg, "Interstar, Inc." is a company incorporated by Zimmerman in North Dakota. (Tr. at 86.) Further information concerning Interstar is lacking. In any event, the amount of the wages paid by Big Z for the period of time in question was not seriously disputed by appellant.

4. The information requested included the date and place of each employee's hire, a copy of driver log books for 1993 and 1994, and location of other Montana Big Z records. (UEF Ex. A at 2.)

5. The UEF auditor received one response from Flint Bibler. That response indicated that Bibler worked at a shop and farm and that the only driving he did was of farm vehicles, and that his driving was not until 1994. (UEF Ex. D at 14-15.)

6. Aaberg was living and dispatching in Billings at the time Long was working in Utah.

7. To be sure, Kim Aaberg's salary was paid by Zimmerman even though she served as bookkeeper for Montana Big Z , did Montana Big Z dispatching, and she was initially hired by Montana Big Z. But Aaberg also testified that Zimmerman Trading "performed administrative services for other entities controlled by Mr. Zimmerman . . . ." (Tr. at 51.)

8. The hearing officer did not specifically address the residency of the other truckers employed by Big Z between December 21, 1992 and May 2, 1994.

9. In 1993 subsection (4) was amended by inserting "interstate or intrastate" and minor changes were made in style. Otherwise the statute was unchanged from the 1991 version. Both 1991 and 1993 versions are involved in this case since the penalty period overlapped the 1991 and 1993 statutes. That overlap, however, is immaterial as the statutes were virtually the same.

10. Section 39-71-118, MCA, was amended in 1993 but the amendments do not affect the provisions cited herein other than to change the number of subsection (6) of the 1991 statute to subsection (7) of the 1993 statute.

11. In 1997 subsection (2) was amended by adding "If a person claims a residence within Montana for any purpose, then that location is the person's residence for all purposes unless there is a specific statutory exception."