Hudson v. Allen

11 Mich. App. 511 (1968) 161 N.W.2d 596

HUDSON
v.
ALLEN.

Docket No. 3,610.

Michigan Court of Appeals.

Decided May 29, 1968. Leave to appeal denied September 30, 1968.

Charles E. Martell and Eugene Field, for plaintiffs.

Troff, Lilly, Bonow, Piatt & File, and Cholette, Perkins & Buchanan (Richard Ward, of counsel), for defendants.

Leave to appeal denied September 30, 1968. See 381 Mich 778.

NEAL E. FITZGERALD, J.

Defendant brings appeal from an order denying his motion for accelerated judgment,^[1] charging that the plaintiffs' claim for damages is barred by the plaintiff Marjorie Hudson's application for and acceptance of compensation under the workmen's compensation act.^[2]

Defendant Austin H. Allen is the proprietor of a drugstore at 5922 Kings highway in Comstock, Michigan, doing business under the assumed name of "Allen Super Drugs". Several doors away in the same block of stores Allen also operates the "Comstock Laundromat". Plaintiff Marjorie Hudson was employed in the drugstore on September 12, 1964, the day she sustained the injuries that form the basis of her claim here. While in the course of her employment, plaintiff was delivering a hamburger from the drugstore to a customer down the street. As plaintiff passed the Comstock Laundromat while on this mission, the door of the laundromat suddenly opened, and she went through it, cutting herself severely. She alleges negligence in the location and maintenance of the door.

Defendant Austin H. Allen is the sole proprietor of both Allen Super Drugs and the Comstock Laundromat. The records are kept in common, and all tax liability incurred in the operation of both the drugstore and the laundromat is reported and paid under the Allen Super Drug title.

Plaintiff Marjorie Hudson applied for compensation, and over a period of 86 weeks received amounts totaling $2,637.62. On November 7, 1966 she brought this action against Austin H. Allen, claiming $100,000 damages. John E. Hudson, plaintiff's husband, sues for the loss of his wife's consortium. Lamoin M. Allen, the defendant's wife, was later joined as a party defendant since she shares in the profits of her husband's business enterprise.

The defendants moved for accelerated judgment, asserting that the claims of the plaintiffs were barred because Marjorie Hudson had exhausted the exclusive remedy for her injuries by applying for and accepting compensation. The trial court denied the motion, and the issue is here on appeal.

The defendants rely on the provision of the workmen's compensation act granting release from liability at law to any employer covered by the act:

"Where the conditions of liability under this act exist, the right to the recovery of compensation benefits, as herein provided, shall be the exclusive remedy against the employer." CL 1948 § 411.4 (Stat Ann 1960 Rev § 17.144).

"If the employee, or his dependents, in the case of his death, of any employer subject to the provisions of this act files any claim with, or accepts any payment from such employer, or any insurance company carrying such risks, or from the commissioner of insurance on account of personal injury, or makes any agreement, or submits any question to arbitration under this act, such action shall constitute a release to such employer of all claims or demands at law, if any, arising from such injury." CL 1948, § 416.1 (Stat Ann 1960 Rev § 17.212).

The plaintiffs claim that the defendant was, in the operation of his laundromat, a legal personality separate and distinct from the legal personality operating the drugstore, and that therefore, as the tortfeasor here, the defendant was a "person other than * * * the employer" within the meaning of part 3, § 15 of the workmen's compensation act:

"Where the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation payments shall not act as an election of remedies, but such injured employee or his dependents or their personal representative may also proceed to enforce the liability of such third party for damages in accordance with the provisions of this section." CLS 1961, § 413.15 (Stat Ann 1960 Rev § 17.189).

The question before us is whether the defendant Austin H. Allen may be considered for the purposes of this action "some person other than * * * the employer".

Plaintiffs rely primarily on the California case of Duprey v. Shane, (1952), 39 Cal 2d 781 (249 P2d 8), asserting that, although the decision is not authority in this jurisdiction, the analogy it bears to the instant case provides cogent support for this claim. In Duprey, the plaintiff was a practical nurse in the employ of the Shane Diagnostic Foundation, a partnership of which the defendant Dr. Shane was a member, engaging in the practice of chiropractic medicine. The plaintiff injured her neck in the course of her employment while trying to prevent a patient from falling off a treatment table. She requested treatment from the defendant Dr. Shane whose application of muscular pressure, she alleged, aggravated the injury to her neck. After applying for and receiving compensation under the California labor code, the plaintiff sued the defendant doctor for malpractice, and she obtained a jury verdict. The defendant appealed, alleging that the compensation award barred recovery in an action at law. The California supreme court affirmed the judgment, saying:

"The question involved can be stated as follows: Where an employee of a doctor is injured in the course and scope of the employment, and the insured employer treats the industrial injury, and does so negligently, proximately causing a new and further injury and disability, may the employee sue the employer-doctor for malpractice, or has the commission exclusive jurisdiction? It is our conclusion that, when the employing doctor elected to treat the industrial injury, * * * the doctor assumed the same responsibilities that any doctor would have assumed had he been called in on the case." 39 Cal 2d 781, 789 (249 P2d 8, 13).

Duprey v. Shane, supra, differs crucially from the case at bar. The recovery at law allowed in Duprey was on account of the second injury caused by the malpractice of the defendant doctor, who elected to treat the plaintiff's first injury, the industrial injury, which the California court recognized would not be compensable at law. The parties, who were in the relationship of employer and employee, voluntarily entered into the second relationship of doctor and patient, out of which resulted plaintiff's second injury for which she was awarded damages on account of the defendant's malpractice. In the instant case, on the other hand, one injury only is involved.

Helmic v. Paine (1963), 369 Mich 114, urged by plaintiffs, does not aid our decision here, for in Helmic the question was whether the plaintiff and defendant were, at the time of the plaintiff's injury, fellow employees within the meaning of the workmen's compensation act.

The fundamental question we must decide is not novel in this jurisdiction. In Bross v. City of Detroit (1933), 262 Mich 447, a city fireman, who was injured when his ladder truck collided with a streetcar belonging to the city of Detroit, attempted to win damages at law against the city, after having accepted a pension in lieu of compensation. The fireman contended that even if the provisions of the workmen's compensation act were applicable, the act did not operate to bar his claim since he alleged a second legal personality in the city as the operator of the street railway system. The court decided otherwise, rejecting the contention that the city in its operation of the street railway system was "some person other than * * * the employer."

Our Supreme Court refused to adopt the dual personality theory in Bross, and the statute as then in effect included the same wording on which we are asked to base a finding that the defendants must respond in damages here: "some person other than * * * the employer." Our conclusion is that, had the legislature desired the word "employer" as used in part 3, § 15 to be understood in a dual sense under certain circumstances, it could have so provided. And this conclusion is reinforced by the observation that the lawmakers did create just such a dual personality in providing that, for the purposes of the workmen's compensation act, a working partner can also be considered an employee of a partnership. CLS 1961, § 411.7 (Stat Ann 1968 Cum Supp § 17.147). This duality is discussed and interpreted by Justice OTIS SMITH in Ayers v. Genter (1962) 367 Mich 675, in which the Court allowed a suit against a partnership by a partner who was injured while working at a construction site.

It is also pertinent to note the act requires that every insurance contract covering an employer "shall in one and the same insurance policy, insure, cover and protect all the businesses, employees, enterprises and activities of such employer". CLS 1961, § 414.1 (Stat Ann 1960 Rev § 17.195). This section provides the inference that, in the conception of the legislature, each employer raises one large umbrella to cover all persons whom he may employ, and this again reinforces our conclusion that the defendant Austin H. Allen may not here be considered "some person other than * * * the employer". Absent a statutory provision creating a dual personality, such as is found in CLS 1961, § 411.7, supra, we will not recognize one.

Furthermore, the fact that the laundromat operated by the defendant Austin H. Allen was not set up as an independent legal entity, that all its records were kept in common with those of the drugstore, and that its withholding taxes and other taxes were reported and paid under the Allen Super Drug title, demonstrates that the two businesses were operated as one entity. The two operations realistically represent a single unit with a single employer, and we do not find a dual legal personality in the defendant Austin H. Allen under these circumstances.

We therefore must disagree with the learned circuit judge in his conclusion that the defendant Austin H. Allen should be considered "some person other than * * * the employer" for the purposes of plaintiffs' action. We conclude that the statute means exactly what it says, and Austin H. Allen is the employer and only the employer, and not a third party in relation to Marjorie Hudson. Therefore Marjorie Hudson's exclusive remedy for the injuries she sustained on September 12, 1964 while in the employ of the defendant is under the workmen's compensation act. CL 1948, § 411.4, supra.

The action of plaintiff's husband, John E. Hudson, for loss of consortium, must also fail. Balcer v. Leonard Refineries, Inc. (1963), 370 Mich 531; Moran v. Nafi Corporation (1963), 370 Mich 536.

Reversed. Costs shall be paid by the appellees.

JOHN W. FITZGERALD, P.J., and BURNS, J., concurred.

NOTES

[1] See GCR 1963, 116.

[2] CL 1948, § 411.1 et seq., as amended (Stat Ann 1960 Rev and Stat Ann 1968 Cum Supp § 17.141 et seq.).