Cockburn v. Industrial Commission, 1
| Decision Date | 27 May 1968 |
| Docket Number | CA-IC,No. 1,1 |
| Citation | 7 Ariz.App. 486,441 P.2d 252 |
| Parties | Curtis D. COCKBURN, Petitioner, v. The INDUSTRIAL COMMISSION of Arizona, and Cave Creek Building Supply, Inc., Respondents. 169. |
| Court | Arizona Court of Appeals |
John S. Schaper, Phoenix, for petitioner.
Robert K. Park, Chief Counsel, by Noel J. R. Levy, Phoenix, for respondent, The Industrial Commission.
This is a writ of certiorari to review the lawfulness of the decision of the Industrial Commission of Arizona, finding petitioner's claim noncompensable.
We are called upon to determine two issues. First, whether an officer, director and stockholder of a corporation performing certain services and work for the corporation is eligible for compensation under the Workmen's Compensation Act. Second, whether the petitioner herein is to be considered as having rejected the terms of the Act, therefore rendering his claim noncompensable.
Curtis D. Cockburn, the petitioner herein, together with Charles L. Davis, in 1963 organized a corporation known as the Cave Creek Building Supply, Inc. They have been the only directors and shareholders, and their wives the only other officers of the company since. Both men worked full time in the business. In addition to ministerial work, petitioner performed physical labor such as carpentry work and electrical work in the corporation's contracting business. In November 1964 the corporation applied to the Commission for a policy providing workmen's compensation coverage. A policy was issued in December of 1964, and a letter was sent to the corporation by the Commission advising that corporate officers 'are excluded from coverage until notification of the terms of the contract of hire is given to this Commission'. It further advised, 'if officers who draw salaries do not elect to be covered it will be necessary that they reject the terms and provisions of the Compensation Act.' The policy which was issued to Cave Creek Building Supply, Inc. contained the following endorsement:
'* * * it is understood and agreed that one or more of the officers of the employer corporation is performing services for the corporation without remuneration, salary or pay; that such individuals are not considered covered under the terms of this policy until notification of the terms of the contract of hire is given to the Commission.'
In 1964 none of the corporate officers received a fixed salary or had a 'contract of hire' with the corporation. They did not believe themselves to be eligible for, or covered by, workmen's compensation.
On February 19, 1966 petitioner, together with Davis and their wives, executed formal written rejections of the Workmen's Compensation Act. There is a conflict in the testimony as to whether the Commission's auditor requested these rejections, or whether he merely left the rejection slips to be made available to employees. Cockburn testified:
'The auditor had reviewed our employment records and noted that the officers were not drawing salary, and so he asked us to go ahead and sign these rejection slips just to clarify the record down here as we understood it, it wouldn't make any difference anyway since we weren't covered, so we just signed them as a favor.'
In June 1966 an endorsement was issued by the Commission to all corporate policies which eliminated the December 1964 endorsement, and provided that active executive officers would be covered but that officers performing ministerial functions would not be. Employers were advised that payroll for officers would be covered but that officers performing ministerial functions would not be. Employers were advised that payroll for officers would have to be included in reports to the Commission for premium purposes. The petitioner then had the bookkeeper report him and Mr. Davis to the Commission as employees at a minimum wage of $200 per month. This wage was never authorized by the minutes of the corporation.
Petitioner was injured on the job in September 1966 when he fell off a ladder. In October 1966 he was loading a truck with cement tile and again injured his back. He was hospitalized for eleven days and had surgery for a disc. He made application for workmen's compensation and an award was issued denying compensation as the result of the formal rejection of the Workmen's Compensation Act by petitioner in February of 1966.
With reference to the first issue, it is generally accepted that the individual corporate officer and stockholder who acts also in the capacity of a worker is entitled to workmen's compensation. 58 Am.Jur., Workmen's Compensation § 150. For cases on this subject see 81 A.L.R. p. 644. In Williams v. Williams Insulation Materials, Inc., 91 Ariz. 89, 370 P.2d 59 (1962), our Supreme Court recognized that a corporate officer may also be considered an employee. It said:
* * *' 91 Ariz. at 94, 370 P.2d at 63
We believe there is no question but that a corporate officer, whether or not he is also a director or stockholder, whose work for the corporation is neither casual not exclusively ministerial, was intended to be eligible as an employee for benefits as set forth in A.R.S. § 23--1021.
There is no question in our minds but that petitioner, who from the very inception did general work for the corporation, particularly such things as carpentry and electrical work in connection with the business, was entitled to be covered by the Act as an employee if he drew wages authorized by the corporation, and if he did not reject the terms of the Act.
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Henderson v. Gardner Mechanical Contractors, Inc., 1
...a $34.00 amount to cover Henderson under workers' compensation. This same argument was made and rejected in Cockburn v. Industrial Comm'n, 7 Ariz.App. 486, 441 P.2d 252 (1968) on the grounds that the acceptance of a premium by the Fund where the amount of any given premium is except by audi......
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Dunwoody v. Industrial Commission
...performs supervisory or physical tasks which if performed by another would confer employee status. See also Cockburn v. Industrial Commission, 7 Ariz.App. 486, 441 P.2d 252 (1968). In the instant case, after the business was incorporated, the petitioner maintained his position as general ma......