Harvey Auto Supply Inc. v. Industrial Commission

• Decision Date: 02 December 1975
• Docket Number: No. 1,CA-IC,1
• Citation: 542 P.2d 1154,25 Ariz.App. 274
• Parties: HARVEY AUTO SUPPLY INC. and Fidelity & Casualty Company of New York, Petitioners, v. The INDUSTRIAL COMMISSION of Arizona, Respondent, George W. Harvey, Respondent Employee. 1222.
• Court: Arizona Court of Appeals

Page 1154

542 P.2d 1154

25 Ariz.App. 274

HARVEY AUTO SUPPLY INC. and Fidelity & Casualty Company of New York, Petitioners, v. The INDUSTRIAL COMMISSION of Arizona, Respondent George W. Harvey, Respondent Employee.

No. 1 CA-IC 1222.

Court of Appeals of Arizona, Division 1, Department C.

Dec. 2, 1975.

Rehearing Denied Jan. 9, 1976.

Review Denied Feb. 3, 1976.

Jones, Teilborg, Sanders, Haga & Parks, P.C., by James A. Teilborg, Phoenix, for petitioners.

Greg L. Folger, Chief Counsel, The Industrial Commission of Arizona, Phoenix, for respondent.

Frost & Porter, by G. Terris Porter, S. Gibbons Frost, Show Low, for respondent employee.

OPINION

WREN, Judge.

Fidelity and Casualty Company of New York, the insurance carrier for Harvey Auto Supply, Inc., petitioned for writ of certiorari to review a determination of average monthly wage made by the Industrial Commission. We have concluded that the average monthly wage was correctly computed and affirm the decision of the Commission.

George W. Harvey, the respondent employee, was injured during the course of his employment with Harvey Auto Supply on October 8, 1973. His claim for benefits was accepted by the carrier in its Notice of Claim Status of October 26, 1973, and average monthly wage set at $600. Thereafter on November 2, 1973, the Industrial Commission approved Harvey's claim and the average wage was found to be $600. Harvey filed a request for a hearing alleging an average monthly wage of $1,000. A second Notice of Claim Status was issued on January 14, 1974 releasing Harvey to temporary partial disability status and a hearing was again requested by Harvey raising the issue of average monthly wage. A hearing was held in Show Low, Arizona on May 21, 1974 directed solely to this question. On June 20, 1974 the hearing officer entered an award finding Harvey's average monthly wage to be $1,000.

The uncontroverted facts are as follows: Harvey Auto Supply, Inc. was a closelyheld family corporation which had its first Board of Directors meeting on August 1, 1973. At that meeting, the Board resolved that Harvey would receive a monthly salary of $1,000 for his labor and services to the business. He was given the option of taking this salary in cash or in stock with a par value of $100 per share.

From the time his employment began on August 1, 1973 until his injury on October 8, Harvey received two salary checks totalling $861.30. According to Harvey, these checks represented his salary for one two week pay period in August and one in September. The sum represented a salary of $500 for each period minus withholding tax. Harvey testified that he had chosen to receive his salary for the other two pay periods in corporate stock. However, $1,000 in stock was not issued to Harvey until January 31, 1974 and his income tax return for 1973 reflected a salary totalling only $1,000 for the two months he worked at Harvey Auto Supply.

It is the carrier's position that the determination of average monthly wage can be based only upon the amount of wages actually Received by an employee in the month prior to the injury. No contention is made that Harvey's allotted salary of $1,000 per month was unreasonable or that if he had in fact received $1,000 for those two months that he would not have legitimately earned it. The record adequately reflects Harvey's entitlement to the stipulated wage. The crucial fact, according to the carrier, is not the amount Earned by an employee but the amount actually Paid. Therefore, it urges, only Harvey's actual receipts prior to his injury can be considered in fixing his average monthly wage.

A.R.S. § 23--1041D provides: 'The term 'monthly wage' means the average wage paid during and over the month in which the employee is killed or injured.' The carrier insists that the term 'wages paid' must be given a literal interpretation so that unpaid wages of speculative value do not influence the determination of average monthly wage.

While it may be possible for a closelyheld corporation to influence the determination of average monthly wage by issuing stock of a stated but questionable value to an employee-director, such is clearly not the case here. Harvey had an option established prior to his accident to take cash or stock and was free to exercise that option at any time. The fact that he could have received cash at his opinion dispelled any possibility of improper influence on average monthly wage. The carrier...