49 Pa. Commw. 189 | Pa. Commw. Ct. | 1980
Opinion by
Harry Zeruld Company (Company) appeals from an order of the Workmen’s Compensation Appeal Board (Board) which affirmed the referee’s award of death benefits to Molly Zeruld (claimant). She sought benefits for the death of her husband, Harry Zeruld (decedent), who was fatally injured in December of 1975 while working at the Company in its regular course of business. He died in January of 1976. The sole issue presented here is whether or not the decedent was an employe of the Company within the definition of “employe” in Section 104 of The Pennsylvania Workmen’s Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §22, so
It is undisputed that until January of 1967 the decedent was the sole proprietor of a cotton waste business and that, when the business was incorporated in 1967 as Harry Zeruld Company, Inc., he became the sole owner of the Company’s stock. The three directors of the Company from the time of its incorporation until the decedent’s death were the decedent, the claimant, and a third person who has not taken an active role in the Company since 1967. In February of 1967, the board 'of directors of the Company voted to employ the decedent as the corporate manager at a salary of $300.00 per week. Dividends were never declared by the Company, but the decedent drew a weekly bonus amounting to a yearly maximum of $30,000 which was based proportionately on the Company’s annual profits. It is undisputed that he exercised complete control over the Company and over all the workings of the Company. He was duly elected as president and treasurer of the Company and remained in these executive offices until his death.
Section 104 of the Act, 77 P.S. §22, clearly includes in its definition of “employe” all corporate executive officers irrespective of whether or not such officers have exercised control over the services of others in the corporation.
It is a well-settled rule, however, that the courts of this Commonwealth will not disregard a corporate entity absent a showing that the entity was used for the perpetration of fraud, or as a means to justify a wrong, or that the corporate assets were illegally used for the benefit of the controlling party . Ashley v. Ashley, 482 Pa. 228, 393 A.2d 637 (1978). It is appropriate to hold here, therefore, as Judge Menceb, held in Gayer v. Quaker Hair Goods Co., 5 Pa. Commonwealth Ct. 133, 289 A.2d 763 (1972), though not there confronting the same issue, that:
Absent a showing of fraud or improper corporate manipulations designed to circumvent the public policy encompassing the Workmen’s Compensation Act, courts will not sanction a disregard of the corporate entity. . . . There must be present some item of unfairness, injustice or some compelling public policy favoring such disregard. (Citation omitted.)
5 Pa. Commonwealth Ct. at 138, 289 A.2d at 766.
There is no evidence in the record before us indicating any such misuse of the corporate entity. The
We cannot, therefore, disregard the corporate entity of the Company in this proceeding.
Moreover, we would reach the same result here even without the mandate of Section 104 of the Act, for cases interpreting the meaning of “employe” in the Act indicate that the crucial determinant of employe status is whether or not the alleged employe is subject to the right of control of an alleged employer. Heilner v. Workmen’s Compensation Appeal Board, 38 Pa. Commonwealth Ct. 494, 393 A.2d 1085 (1978). And Section 401 of the Business Corporation Law, Act of May 5, 1933, P.L. 364, as amended, 15 P.S. §1401, clearly provides that the right of control over all the business and affairs of a corporation is vested in the board of directors as a whole, and not in any single director or officer. The decedent, therefore, as an officer and manager of the Company, was legally subject to the ultimate right of control by the entire board and must be classified as an employe for the purposes of the Act.
We must accordingly affirm the decision of the Board below finding the claimant to be eligible for death benefits'.
Order
And Now, this 4th day of February, 1980, the order of the Workmen’s Compensation Appeal Board in the above-captionéd case is hereby affirmed and
Compare Section 104 of The Pennsylvania Workmen’s Compensation Act, Act of June 2, 1915, P.L. 736, as amended 77 P.S. §22 with Pardini v. Unemployment Compensation Board of Review, 42 Pa. Commonwealth Ct. 114, 399 A.2d 1211 (1979) and Section 402(h) of the Unemployment Compensation Law, Act of December