Neal v. Oliver

• Decision Date: 17 March 1969
• Docket Number: No. 5--4820,5--4820
• Court: Arkansas Supreme Court
• Parties: Nancy Young NEAL, Appellant, v. J. P. OLIVER and Mamie Oliver, Appellees.

Page 313

438 S.W.2d 313

246 Ark. 377

Nancy Young NEAL, Appellant, v. J. P. OLIVER and Mamie Oliver, Appellees.

No. 5--4820.

Supreme Court of Arkansas.

March 17, 1969.

Sexton & Wiggins, Ft. Smith, for appellant.

Shaw & Bedwell, Ft. Smith, for appellees.

JONES, Justice.

The appellant, Nancy Young Neal, sustained a compensable injury to her left hand while in the course of her employment as a mangle operator for 7--11 Laundry and Cleaners in Fort Smith. 7--11 Laundry and Cleaners is a domestic corporation with J P. Oliver, his wife and son as the sole owners of the corporate stock. Oliver is the president of the corporation and was general manager and supervisor of employees at the time of appellant's injury. 7--11 Laundry and Cleaners came within the provisions of the Workmen's Compensation Law and the appellant was paid full compensation benefits for her injury. The appellant subsequently filed suit in the Sebastian County Circuit Court for personal injuries against Mr. and Mrs. Oliver alleging negligence in assigning her to work on an unsafe machine and in failing to provide the machine with a protective device, in the form of a safety bar, in violation of the state safety code.

On motion for summary judgment, the trial court dismissed the complaint under findings as follows:

'That the Plaintiff, Nancy Young Neal, while employed by the Defendant, J. P. Oliver, and within the course of her employment, did, on April 30, 1965, sustain an injury while operating a mangle ironing machine.

That the Defendant carried full Workmen's Compensation benefits and that the Plaintiff received full compensation benefits including medical and disability both temporary and permanent.

That in view of the pleadings, the Motion and Affidavit attached thereto, the Court finds there is no genuine issue as to any material facts. That question of law is presented to the Court, and the Court finds, as a matter of law, that the Plaintiff, receiving, and accepting full Workmen's Compensation benefits from the Defendant, J. P. Oliver, is therefore barred from filing a suit in negligence at common law against the same employer, J. P. Oliver.'

On appeal to this court, the appellant designates the following point for reversal:

'Appellee, a supervisor, officer and manager, is a third person within the meaning of the Workmen's Compensation statute and, as such, may be held to answer for his own negligence.'

The appellant says 'this cause involves the sole issue as to whether or not the manager of a corporate business is a third person within the meaning of the Arkansas Workmen's Compensation Laws, Ark.Stat.Ann. § 81--1301, et seq.,' and appellant cites several cases from other jurisdictions wherein managers of corporate businesses have been held to be fellow-employees against whom negligent tort actions will lie. But we do not consider the issue in the case at bar to be quite as broad and general as the appellant indicates. The sole issue, as we view the facts in this case, is whether Mr. Oliver, the manager of the corporate business involved in this case, was a third party within the meaning of the Arkansas Workmen's Compensation Law (Ark.Stat.Ann. § 81--1340(a) (Repl.1960)), under the specific facts of this particular case. We conclude that he was not for the reason that he was also the appellant's employer.

The compensation law does not give or create a cause of action against a third party causing a compensable injury to the employee, but only makes it plain that such common law remedy as the employee already had against tort feasors prior to the enactment of the Workmen's Compensation Act, was fully preserved and left unchanged by the act when the tort feasor is other than the employer.

Arkansas Statutes Annotated § 81--1340(a) (Repl.1960) is as follows:

'(1) The making of a claim for compensation against any employer or carrier for the injury or death of an employee shall not affect the right of the employee, or his dependents, to make claim or maintain an action in court against any third party for such injury, but the employer or his carrier shall be entitled to reasonable notice and opportunity to join in such action. If they or either of them, join in such action they shall be entitled to a first lien upon two-thirds (2/3) of the net proceeds recovered in such action that remain after the payment of the reasonable costs of collection, for the payment to them of the amount paid and to be paid by them as compensation to the injured employee or his dependents.

(2) The commencement of an action by an employee or his dependents against a third party for damages by reason of an injury, to which this act (§§ 81--1301--81--1349) is applicable, or the adjustment of any such claim shall not affect the rights of the injured employee or his dependents to recover compensation, but any amount recovered by the injured employee or his dependents from a third party shall be applied as follows: Reasonable costs of collection shall be deducted; then one-third (1/3) of the remainder shall, in every case, belong to the injured employee or his dependents, as the case may be; the remainder, or so much thereof as is necessary to discharge the actual amount of the liability of the employer and the carrier; and any excess shall belong to the injured employee or his dependents.'

The term 'third party' is not defined in the act and the first and second parties are not even mentioned, but from the language employed in the context it is used in § 1340(a), supra, 'third party' can only mean some person or entity other than the first and second parties involved, and the first and second parties can only mean the injured employee and the employer or one liable under the compensation act. Thus, it is obvious from the wording of the statute, as well as common sense, that a 'third party' within the meaning of the act, must be some party other than an employer who is liable under the act and to whom is also given a statutory right of subrogation against a third party tort feasor. The terms 'employer,' 'employee' and 'employment' are defined in the compensation act, Ark.Stat.Ann. § 81--1302(a)(b) and (c) (Repl.1960), as follows:

'(a) 'Employer' means any individual, partnership, association or corporation carrying on any employment, or the receiver or trustee of the same, or the legal representative of a deceased employer.

(b) 'Employee' means any person, including a minor, whether lawfully or unlawfully employed, in the service of an employer under any contract of hire or apprenticeship, written or oral, expressed or implied, but excluding one whose employment is casual and not in the course of the trade, business, profession or occupation of his employer. Any reference to an employee who has been injured shall, when the employee is dead, also include his legal representative, dependents and other persons to whom compensation may be payable.

(c) 'Employment' means:

(1) Every employment carried on in the State in which five (5) or more employees are regularly employed by the same employer in the course of business or businesses, except domestic service, agricultural farm labor, institutions maintained and operated wholly as public charities, the State of Arkansas and each of the political subdivisions thereof, any person engaged in the vending, selling or offering for sale, or delivery directly to the general public, any newspapers, magazines or periodicals, or acting as sales agent or distributor as an independent contractor of or for any such newspaper, magazine or periodical.

(2) Every employment in which two (2) or more employees are employed by any person engaged in building or building repair work.

(3) Every employment in which one or more employees is employed by a contractor who subcontracts any part of his contract.

(4) Every employment in which one or more employees is employed by a subcontractor.'

Appellant correctly points out that this court has held a fellow-employee to be a third party within the meaning of the act, and cites King v. Cardin, 229 Ark. 929, 319 S.W.2d 214. In the King case King drove a dump truck in hauling asphalt on a highway construction job and Dyer spread the asphalt hauled by King. They both were employed by the same contractor. King negligently backed a dump truck over Dyer and fatally injured him. Dyer was not working for King, he only worked with King and, of course, the compensation act did not absolve King from the legal consequences of his own acts of negligence toward Dyer while they both were working for the same employer. In the King case we said:

'We are not impressed by the argument that the Workmen's Compensation Act prevents an employee, or his personal representative, from maintaining an action for the negligence of a fellow employee. Our statute merely provides that the remedies under the act are exclusive of other remedies against the employer. Ark.Stats., § 81--1304. The making of a claim for compensation does not affect the right of the employee or his dependents to maintain an action against a third person. § 81--1340. Under a statute like ours a negligent coemployee is regarded as a third person. Botthof v. Fenske, 280 Ill.App. 362; Kimbro v. Holladay, La.App., 154 So. 369; Churchill v. Stephens, 91 N.J.L. 195, 102 A. 657.'

The appellant cites Brooks v. Claywell, 215 Ark. 913, 224 S.W.2d 37, and argues that since we have held a president of a corporation to be also an employee for the purpose of bringing the business under the provisions of the compensation act, we should now 'pierce the corporate veil' and hold the president and manager of a family corporation to be a fellow-employee for the purpose of third party liability. We do not agree with this contention, for the difference lies in the employee-employer relationship in determining third party liability as in the case at bar and as distinguished from the title of the chief officer of the business entity and nature of the tasks he...