Elliott v. Brown

• Decision Date: 14 October 1977
• Docket Number: No. 2835,2835
• Citation: 569 P.2d 1323
• Parties: Robert ELLIOTT and Gaylan Olson, Appellants, v. Stanley F. BROWN and Paxson Lodge, Inc., Appellees.
• Court: Alaska Supreme Court

Page 1323

569 P.2d 1323

Robert ELLIOTT and Gaylan Olson, Appellants, v. Stanley F. BROWN and Paxson Lodge, Inc., Appellees.

No. 2835.

Supreme Court of Alaska.

Oct. 14, 1977.

Joseph W. Sheehan, Fairbanks, for appellants.

Burton C. Biss, of Biss & Holmes, Anchorage, for appellees.

OPINION

Before BOOCHEVER, C. J., CONNOR and BURKE, JJ., and DIMOND, J. Pro Tem.

CONNOR, Justice.

This is an action by two employees against their employer for an assault and battery inflicted upon them. We must decide whether workmen's compensation is the exclusive remedy and, if not, whether prior proceedings before the workmen's compensation board nevertheless bar this suit.

Plaintiffs and appellants Robert Elliott and Gaylan Olson were employed as kitchen workers at the Paxson Lodge on the Richardson Highway. The lodge was owned and operated by defendant and appellee Paxson Lodge, Inc. (Paxson). The other defendant and appellee, Stanley F. Brown, was manager of the lodge and owned 50 percent of the shares of the corporation.

On September 6, 1974, in the room which Elliott and Olson shared on the premises, Brown shoved Olson and hit Elliott. He was apparently upset that Elliott was not at work due to illness. Brown pleaded guilty to assault and battery and was placed on six months' probation, with suspended imposition of sentence.

Olson filed a workmen's compensation claim. Elliott did not. Olson was awarded $5,670.91 compensation under the workmen's compensation act.

Thereafter Elliott and Olson filed this suit. Cross-motions for summary judgment were filed. The defendants relied on the workmen's compensation award both as providing the exclusive statutory remedy and as res judicata and collateral estoppel. The plaintiffs relied on Brown's guilty plea as an admission, and on the vicarious liability of the corporation. On February 17, 1976, the trial court granted the defendants' motion and denied the plaintiffs'. It held that the action against Paxson was barred by the statutory exclusivity of workmen's compensation, and the action against Brown by collateral estoppel. The plaintiffs appealed.

I

Paxson Lodge, Inc. was the employer of Elliott and Olson. They seek to hold it vicariously liable for the acts of its managerial employee, Brown, and apparently also seek to hold it liable on the theory that it is the alter ego of Brown.

Paxson is not vicariously liable to Elliott and Olson in this action for the acts of its managerial employee, Brown. AS 23.30.055 makes workmen's compensation the exclusive remedy against the employer for compensable injuries. AS 23.30.265(13) defines compensable injuries to include "an injury caused by the wilful act of a third person directed against an employee because of his employment." We have never considered whether a supervisory employee is a "third person" within this definition. We now hold that a supervisor is such a third person and so workmen's compensation is the exclusive remedy against the employer. ¹

Both philosophical and practical considerations support this conclusion. Since the employer's liability would only be vicarious, we are not insulating it against common-law liability for its own wilful acts. Vicarious liability does not rest on any form of moral culpability of the corporation. Furthermore, the beneficial effect of the rule that workmen's compensation is the exclusive remedy in workplace fight cases would be largely destroyed if every case required an inquiry into the relative rank of the assailant and victim, an inquiry which is not relevant to the question whether the quarrel was work-related. See generally 2A A. Larson, The Law of Workmen's Compensation § 68.21 (1976).

Principally for these reasons, most courts which have considered this question have held that workmen's compensation is the exclusive remedy in these circumstances. E. g., Burkhart v. Wells Electronics Corp., 139 Ind.App. 658, 215 N.E.2d 879 (1966); McGrew v. Consolidated Freightways, Inc., 141 Mont. 324, 377 P.2d 350 (1963).

Nor do the facts indicate that the corporation is Brown's alter ego, so that the corporate veil may be pierced and the corporation's assets made liable for his intentional torts.

The corporate veil may not be pierced merely because Brown controls the activities of the corporation. Rather, the veil may be pierced only if the corporate form is used "to defeat public convenience, justify wrong, commit fraud, or defend crime." Jackson v. General Electric Co., 514 P.2d 1170, 1172-73 (Alaska 1973). See generally N. Lattin, The Law of Corporations § 14 (2d ed. 1971), and sources there cited. In Jackson we affirmed the trial court's conclusion that a subsidiary corporation was not the alter ego of its parent corporation. We there refused to pierce the veil and hold the parent liable for an intentional tort committed by the subsidiary, despite evidence of a very close relationship between the two corporations.

The record in this case reveals that Brown is the president of the corporation and owns 50 percent of its shares. The owner of the other half resides in Seattle, Washington, while Brown resides on and manages the premises. Brown is a salaried employee of the corporation.

Whatever these facts might suggest concerning Brown's control of the corporation, they do not present a contested issue of fact concerning the application of the alter ego doctrine. This doctrine requires considerably more than mere control; it exists to prevent a party from obtaining an advantage through deceptive or manipulative conduct. There is no evidence of such conduct in this case. Therefore, we hold that the alter ego doctrine does not constitute a ground for reversal of the superior court's summary judgment in favor of the corporation.

II

We must next consider whether Brown may be personally liable to the plaintiffs, or whether the exclusivity of workmen's compensation bars their action against him also. Under AS 23.30.055, workmen's compensation is the exclusive remedy and bars a common-law action against a fellow employee. ² The statute is not by its terms limited to negligent acts, and we must consider whether it makes workmen's compensation the exclusive remedy for the intentional torts of a fellow employee. Courts have divided on this question. Compare, e. g., Herndon v. UAW Local No. 3, 56 Mich.App. 435, 224 N.W.2d 334 (1974) (compensation exclusive), with, e. g., Williams v. Smith, 222 Tenn. 284, 435 S.W.2d 808 (1968) (common law action not barred). See Annot., 21 A.L.R.3d 845, 880-81 § 11 (1968 & Supp.1976).

We have concluded that the compensation remedy should not be exclusive when an employee commits an intentional tort on a fellow worker. The socially beneficial purpose of the workmen's compensation law would not be furthered by allowing a person who commits an intentional tort to use the compensation law as a shield against liability. See Bryan v. Utah International, 533 P.2d 892, 894 (Utah 1975). Workmen's compensation benefits are paid from employers' premiums, as a means of spreading the cost of hazards of the workplace. We do not believe it would be wise public policy to allow an intentional tortfeasor to shift his liability for his acts to such a fund. Assaults by fellow workers differ not in degree but in kind from the type of harm the statute was enacted to deal with.

Courts in other jurisdictions have held that such assaults, though accidental from the standpoint of the employee, are not accidental from the standpoint of the tortfeasor. See 2A A. Larson, Workmen's Compensation, Sec. 68.11. Therefore, such assaults can be considered as falling outside the purview of the "accidental" injuries covered by the act.

We agree with the superior court that the plaintiffs should be entitled to maintain this common-law tort action against Brown, unless it is barred for some other reason. We now turn to consideration of those other grounds which Brown offers in defense of the judgment below.

III

Gaylan Olson was awarded workmen's compensation benefits for the injuries which are the subject of this action. The compensation...