Cooper v. Industrial Commission

• Decision Date: 27 October 1952
• Docket Number: No. 5643,5643
• Citation: 74 Ariz. 351,249 P.2d 142
• Parties: COOPER v. INDUSTRIAL COMMISSION.
• Court: Arizona Supreme Court

Page 142

249 P.2d 142

74 Ariz. 351

COOPER v. INDUSTRIAL COMMISSION.

No. 5643.

Supreme Court of Arizona.

Oct. 27, 1952.

Shute & Elsing, of Phoenix, for petitioner.

Robert E. Yount, of Phoenix, H. S. McCluskey and Robert W. Pickrell, of Phoenix, of counsel, for respondent Industrial Commission.

LA PRADE, Justice.

This proceeding grows out of a writ of certiorari that was issued by this court ordering a review of an award of the Industrial Commission of Arizona, denying the petitioner, John Cooper, compensation as an injured employee.

The record discloses that petitioner received an injury while working at the residence of Mr. Anthony Van Wagenen in Phoenix, Arizona, at which time he was doing carpentry work. At the date of this occurrence Van Wagenen was the president and sole owner of all the shares of stock in an Arizona corporation known as the General Farms Company, which carried a policy of insurance with the Industrial Commission. The corporation was engaged in extensive farming operations, with its principal place of business at Eloy, Arizona. The petitioner was carried on the payroll of the General Farms Company, and at the time of the accident was reported as an employee of the company. However, further investigation disclosed that although petitioner was carried as an employee of the company and was paid by the company, that this bookkeeping operation was for the accommodation of Van Wagenen, and that Van Wagenen's personal account with the company was charged with the wage payments made to petitioner. Van Wagenen, at his residence, had no employees other than domestic help and the petitioner.

The findings of the Commission were:

1. That the injuries sustained by John Cooper on the 17th day of May, 1951 arose out of his employment with a Mr. Anthony Van Wagenen, an individual, and not in the employment of General Farms Company, a corporation.

2. That Van Wagenen, as an individual, did not have in his employ three or more workmen employed in a usual trade business or occupation as defined by law.

3. That it was without jurisdiction.

It is the contention of the petitioner that if the employees of a corporation are insured under the Workmen's Compensation Law, A.C.A.1939, § 56-901 et seq., and one of them is injured while performing work for the sole owner of the corporation, the injured employee is entitled to compensation. This claim is presented under the theory that where there is a unity of ownership between an individual owner and a corporation, the fiction of separate entitles is dissolved and the workman is protected under the act. Petitioner claims that this is a case where the corporate veil should be pierced under the theory of the case of Phoenix Safety Investment Co. v. James, 1925, 28 Ariz. 514, 237 P. 958. He also cites the case of Jaabeck v. Theodore A. Crane's Sons Co., 1924, 238 N.Y. 314, 144 N.E. 625, and Associated Theaters v. Industrial Accident Commission, 1922, 57 Cal.App. 105, 206 P. 665.

We feel that this record presents but two questions:

1. By whom was the employee (petitioner) employed?

2. If the petitioner was employed by Van Wagenen, was Van Wagenen an employer subject to the Workmen's Compensation Law?

We are of the opinion that petitioner has no basis for attacking the valid existence of General Farms Company, a corporation. The company's policy of insurance indicates that it was organized under the laws of the State of Arizona, and at all times since has existed and operated as a valid corporation in its dealings with the Industrial Commission.

The texts and cases that we have examined require more than a mere showing of unity of ownership or interest by the individual in a corporation to permit the penetration of the corporate veil. The Commission found that Cooper was not an employee of the company since there was no showing of any supervision or control and no relationship between Cooper and the company other than a remote and indirect association through one Druding, who was a regular employee of the company (being the employee of the company who actually employed Cooper), and the payment of wages to Cooper by check drawn on the company, for which Van Wagenen was to later reimburse the company. The record discloses that Cooper at no time worked on premises or property belonging to the company. The facts here presented do not fall within the fact situation and rule laid down in Pridgen v. Industrial Commission, 1950, 70 Ariz. 149, 217 P.2d 592. In this case Pridgen was actually an employee of a husband and wife, doing business as Arizona Glass and Mirror Company, and required to perform duties on the ranch of the parties. Such employment on the ranch was contemplated as part of the regular employment of the employees of the company, and was regularly provided for under the policy of insurance by special endorsement covering such ranch operations. It occurs to us that the other cases cited by petitioner are not applicable to this fact situation and offer no assistance. Generally, when a corporate form is urged or carried on for an intent not within the reason and purpose for which it is allowed by law, the form should be disregarded. Whipple v. Industrial Commission, 1942, 59 Ariz. 1, 121 P.2d 876; Phoenix Safety Investment Co. v. James, supra. But where a corporation is operated and maintained for the purpose for which it was incorporated and not as a mere shield of the stockholders, the corporate form of organization cannot be disregarded. Walker v. Southwest Mines Development Co., 1938, 52 Ariz. 403, 81 P.2d 90. These cases point out that there must be evidence to support a finding that a corporation is the alter ego of the sole stockholder before piercing of the veil can be undertaken. The evidence here discloses that the ...