Wilson v. Hasvold

• Decision Date: 07 February 1972
• Docket Number: Nos. 10956,10957,s. 10956
• Citation: 86 S.D. 286,194 N.W.2d 251
• Parties: Harold K. WILSON and Ruby Wilson, Plaintiffs-Appellants, v. Marvin C. HASVOLD, Defendant-Respondent.
• Court: South Dakota Supreme Court

Page 251

194 N.W.2d 251

86 S.D. 286

Harold K. WILSON and Ruby Wilson, Plaintiffs-Appellants, v. Marvin C. HASVOLD, Defendant-Respondent.

Nos. 10956, 10957.

Supreme Court of South Dakota.

Feb. 7, 1972.

Murray Ogborn, Siegel, Barnett, Schutz, O'Keefe & Ogborn, Aberdeen, for plaintiffs-appellants.

Carleton R. Hoy, Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant-respondent.

HANSON, Presiding Judge:

Harold K. Wilson and his wife, Ruby Wilson, instituted separate common-law actions for damages alleged to have been caused by the negligence of defendant, Marvin C. Hasvold. Defendant's motions for summary judgment were granted by the trial court and plaintiffs appeal.

Both actions arose out of an industrial accident on August 20, 1968 while plaintiff, Harold K. Wilson, was working in the course of his employment as construction superintendent for the Turner Construction Company. The accident occurred near Ordway, South Dakota, where the Turner Company was in the process of constructing a highway bridge. A large crane operated by another employee was being utilized to remove metal pilings. The boom on the crane collapsed and struck plaintiff. As a result of his injuries plaintiff received the maximum allowable workmen's compensation benefits.

At the time of the accident defendant, Hasvold, was also on the job site operating a caterpillar tractor which was being used to anchor or stabilize the crane. Hasvold is president of the Turner Construction Company and owns 80 percent of its stock. The complaints, in the present actions, allege defendant was an employee of the Turner Construction Company and plaintiffs' injuries and damages were proximately caused by defendant's negligence in operating a piece of heavy equipment and in directing the operation of the crane.

The rights and remedies of an employee covered by the provisions of our Workmen's Compensation Act are restricted by SDCL 62--3--2 as follows:

'The rights and remedies herein granted to an employee subject to this title, on account of personal injury or death by accident arising out of and in the course of employment, shall exclude all other rights and remedies of such employee, his personal representatives, dependents, or next of kin, on account of such injury or death.'

One exception to the exclusivity of the act is a right of action against third persons as provided by SDCL 62--4--38:

'Whenever an injury for which compensation is payable under this title shall have been sustained under circumstances creating in some other person than the employer a legal liability to pay damages in respect thereto, the injured employee may at his option either claim compensation or proceed at law against such other person to recover damages or proceed against both the employer and such other person, but he shall not collect from both.'

The narrow question presented is whether or not defendant Hasvold, as president and controlling stockholder of the Turner Construction Company, is 'some other person than the employer' subject to plaintiffs' common-law actions for damages. The Turner Construction Company was plaintiff's employer in fact, but defendant contends the statutory immunity from common-law actions protects him as well as the corporation.

Defendant's contention disregards the fact the Turner Construction Company, as a corporation, is a separate legal entity. The corporate veil would have to be pierced and defendant would have to be regarded as the alter ego of the corporation. This is contrary to the express provisions of our Workmen's Compensation Act as SDCL 62--1--7 makes him an 'employee' by providing 'Every duly elected or appointed executive officer of a corporation, other than a charitable, religious, educational, or other nonprofit corporation, shall be an employee of such corporation under this title.' This provision prevents a corporate officer from wearing two hats at the same time. He cannot, at his option, be an 'employer' to gain immunity as the alter ego of the corporation and at the same time be an 'employee' for the purpose of receiving workmen's compensation benefits.

In some jurisdictions the class of persons immune from third party actions by injured employees has been broadened by statute. For example, they include 'the employer and his employees' or 'the employer and those doing his business', or 'to a person in the same employ'. However, our statute confers immunity upon the employer only. An injured employee may therefore maintain a common-law action for negligence against his fellow-employee in this state who may also be a corporate officer. This was the conclusion reached in Webster v. Stewart, 210 Mich. 13, 177 N.W. 230, in which an employee brought a common-law action against the vice president and director of the employing corporation for injuries allegedly caused by defendant's negligence while both were engaged in company business. In construing statutes identical to ours the Michigan Court said 'The words of our statute 'some person other than the employer' should be given their plain and usual meaning. The corporation was the employer. As to the plaintiff, employe , the defendant was a person other than his employer.' Also see Comprehensive Annotation on 'Right To Maintain Direct Action Against Fellow Employee For Injury or Death Covered by Workmen's Compensation' in 21 A.L.R.3d 845.

The general rule on this subject is summarized in Larson's Workmen's Compensation Law, § 72, p. 179 as follows:

'The question whether a corporate officer should be treated as the alter ego of the corporation and partake of its immunity turns out, not surprisingly, to have a quite different answer here than in the cases in which the corporation is attempting to deny the identity between officer and corporation in order to deny corporate liability for assault committed by the officer. In the present setting, modern cases consistently hold that 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.'

In the case of Neal v. Oliver, 246 Ark. 377, 438 S.W.2d 313, cited by defendant, the injured employee brought a tort action against the defendant Oliver who was president, general manager, and principal stockholder of a family owned corporation. Plaintiff alleged defendant was negligent 'in assigning her to work on an unsafe machine and in failing to provide the machine with a protective device'. Under the particular facts and pleadings the court concluded Oliver was not a 'third party' amenable to plaintiff's action for damages. But it may be assumed the Arkansas Court in a proper case would consider a corporate officer to be a fellow-employee responsible for his own personal negligence causing...