Stevens v. Lewis, 7930

• Decision Date: 17 May 1978
• Docket Number: No. 7930,7930
• Citation: 118 N.H. 367,387 A.2d 637
• Parties: Wayne STEVENS v. Richard LEWIS.
• Court: New Hampshire Supreme Court

Page 637

387 A.2d 637

118 N.H. 367

Wayne STEVENS v. Richard LEWIS.

No. 7930.

Supreme Court of New Hampshire.

May 17, 1978.

Burns, Bryant, Hinchey, Cox & Shea, Dover (Paul R. Cox, Dover, orally), for plaintiff.

Wadleigh, Starr, Peters, Dunn & Kohls, Manchester (Theodore Wadleigh, Manchester, orally), for defendant.

DOUGLAS, Justice.

This case involves another facet of our rule that permits an injured employee who has collected workmen's compensation to maintain a third party action against a fellow employee. See generally Vittum v. New Hampshire Ins. Co., 117 N.H. 1, 369 A.2d 184 (1977); Merchants Mut. Cas. Co. v. Tuttle, 98 N.H. 349, 101 A.2d 262 (1953).

The defendant before the bar is the president, treasurer, sole stockholder and a director of the Park Manufacturing Company, a Massachusetts corporation engaged in producing shoe components. In April 1970, that corporation employed the plaintiff on the evening shift to operate a power press known as a "dinker." On his fifth day of work for the company, the die on the machine that the plaintiff was operating became stuck in the cutting board and in trying to dislodge the die, his foot slipped. The machine was activated accidentally with the plaintiff's left hand under the die. He suffered serious injuries resulting in a partial amputation of the hand.

The plaintiff's theory of recovery is that the defendant, being responsible for safety in the plant, breached his duty to provide the plaintiff with a safe place for work in not modifying a dangerous machine by installing proper guards that were known and available at the time of the accident. He relies heavily on a voluntary industry safety standard. The defendant, in addition to denying breach at trial, argues that RSA 281:12 bars the plaintiff's action because the defendant was an alter ego of the corporation, which employed the plaintiff, and the defendant's duty was a corporate responsibility. A jury trial resulted in a verdict for the plaintiff in the amount of $85,000. The defendant's exception relating to the bar of RSA 281:12 is the only question transferred by Goode, J.

As the defendant has noted, New Hampshire is one of only fourteen States that permit employees covered by workmen's compensation to maintain common law tort actions against fellow employees. We did this as a matter of statutory interpretation in Tuttle and have adhered to that rule consistently. See Vittum v. New Hampshire Ins., Co., supra 117 N.H. at ---, 369 A.2d at 187. "(E)ven 'a person who is a corporate officer, director, stockholder, or all three can still be treated merely as a co-employee for purposes of being held accountable in a damage suit . . . . ' " Id. See also Liberty Mut. Ins. Co. v. Home Ins. Indemn. Co., 116 N.H. 12, 15, 351 A.2d 891 (1976).

However, as we implicitly recognized in Vittum, there is a narrow class of persons who are alter egos of their corporations. These persons incorporate to obtain the legitimate advantages of doing business in corporate form, e. g. primarily limited liability and tax savings. The corporate alter ego's income usually does not derive from his ownership of the corporation's stock. Very few such people incorporate and then rely on their dividends to provide their day-to-day income. Since their business provides their sole, or at least their primary, source of income, they become employed by their corporation, usually as one or more of its high officers. They derive their income from the salary they receive.

When such a person incorporates, he has not altered the fundamental nature of his business, merely its form. We believe that this change of form should not vitiate the protection he would derive from RSA 281:12 had he chosen to do business as a sole proprietorship or in partnership. Nevertheless, when the corporate alter ego becomes an employee of his corporation, he assumes the additional role of a fellow employee. As a fellow employee, he then becomes liable for the breach of any duty he owes to his colleagues who are also employed by the corporation. Vittum v. New Hampshire Ins. Co., supra 117 N.H. at 5, 369 A.2d at 187; Merchants etc. Cas. Co. v. Tuttle, supra 98 N.H. at 352, 101 A.2d at 264; Liberty Mut. Ins. Co. v. Home Ins. Indem. Co., supra 116 N.H. at 14-15, 351 A.2d 891.

In the case at hand, it was agreed in the pretrial order that the action had "been...