458 A.2d 859
No. 893, September Term, 1982.Court of Special Appeals of Maryland.
Decided April 12, 1983.
NEGLIGENCE — Right Of Employee To Maintain Suit Against His Co-Employees Who Are Employer’s Corporate Officers And Supervisors — After Employee’s Election To Pursue Claim For And His Acceptance Of Award Under Workmen’s Compensation Act — Effect Of Employee’s Election To Pursue Workmen’s Compensation Claim Upon Employer’s Further Liability For Negligence — Scope Of Immunity From Liability Under Act — Where There Is Claim And Subsequent Award Of Payment Of Compensation By Employer To Employee Suffering Injury In Course Of Employment, No Further Liability Inures To Employer — Immunity Granted Employer Under Act Does Not Unqualifiedly Extend To Employee Whose Negligence Caused Injury So That Where Employee Sustains Compensable Injury Caused By Negligence Of Fellow Employee He May Bring Personal Action Against That Co-Employee. This Court adopted the “Wisconsin” approach and held that where corporate officers or supervisors, whether or not acting realistically as corporation’s alter ego, failed to perform nondelegable duty of employer to provide competent, careful and law-abiding co-employees and whose negligent hiring of one ultimately led to injury to employee, there were no factual circumstances here sufficient to create liability in some other person other than employer, i.e., third party tort-feasor, to pay damages permissible under § 58 of Article 101, thus corporate officers and supervisors stood in shoes of the employer and shared employer’s immunity from suit at law. Trial court’s grant of demurrer without leave to amend held not erroneous. pp. 298-299, 301-302, 305-307
H.E.F.
Appeal from the Circuit Court for Baltimore County (BUCHANAN, J.).
Nicholas Athas filed suit against Robert Lee Hill, Summit Country Club, Inc., Morton C. Pollack, personal representative of the estate of James H. Pollack, Jerome Hurwitz and Mitchell Rosenfeld for personal injuries and damages suffered when attacked by co-employee and defendant Hill. Demurrer filed by defendants Pollack, Hurwitz and Rosenfeld was sustained without leave to amend. After entry of judgment in favor of plaintiff against defendant Robert Lee Hill, he appeals trial judge’s grant of demurrer as to remaining defendants.
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Judgment affirmed; costs to be paid by appellant.[*]
The cause was argued before [*] MORTON and GARRITY, JJ., and CHARLES E. ORTH, JR., Associate Judge of the Court of Appeals (retired), specially assigned.
Howard J. Schulman, with whom was Peter G. Angelos on the brief, for appellant.
Austin W. Brizendine, Jr., with whom were Moore, Hennegan, Carney Ryan on the brief, for appellees.
ORTH, J., delivered the opinion of the Court.
The characters in this long running case are:
Summit Country Club, Inc., the employer;
Jack Pollack, President and Managing Agent of Summit;
Jerome Hurwitz, Vice-president of Summit;
Mitchell Rosenfeld, House Chairman of Summit;[1]
Nicholas Athas, an employee of Summit, the victim;
Robert Lee Hill, an employee of Summit, the assailant.
Athas suffered a disability resulting from an accidental personal injury arising out of and in the course of his employment. The injury was caused by the wilful act of Hill who assaulted Athas, cutting and stabbing him with a knife. See Md. Code (1957, 1979 Repl. Vol.) Art. 101, entitled “Workmen’s Compensation,” hereinafter referred to as “the Act,” § 15 and § 67 (6). Athas proceeded against Summit for compensation under the Act.[2] He also proceeded at law in
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the Circuit Court for Baltimore County against Hill for the assault, and against Pollack, et al. on the ground that they were negligent. He obtained a judgment against Hill in the amounts of $73,000 for compensatory damages and $5,000 for punitive damages. A demurrer by Pollack, et al. was sustained without leave to amend. Athas’ appeal from the ruling is now before us.[3]
Athas presents one question:
“Is a cause of action stated by an employee against a co-employee who undertakes and performs without due care the employer’s duty to provide competent and non-violent co-employees?”
The duty on which Athas relied to support his action at law against Pollack, et al. arises by way of a common law qualification to the fellow-servant rule. Under that qualification it is the duty of an employer to use due diligence in the selection of competent and careful employees and in the retention in its service of none but those who are. The duty is recognized in Maryland. Evans v. Morsell, 284 Md. 160, 164-165, 395 A.2d 480 (1978); Norfolk and Western Railroad Co. v. Hoover, 79 Md. 253, 262, 29 A. 994 (1894); Hamelin v. Malster, 57 Md. 287, 306 (1881). See Leonard v. Sav-A-Stop
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Services, 289 Md. 204, 208, 424 A.2d 336 (1981); Bauman v. Woodfield, 244 Md. 207, 216, 223 A.2d 364 (1966); McVey v. Gerrald, 172 Md. 594, 602, 192 A. 789 (1937); Security C. L. Co. v. Bowers, 124 Md. 11, 16, 91 A. 834 (1914) Bartlett-Hayward Co. v. State, 120 Md. 1, 5, 87 A. 499 (1913) Penn. Steel Co. v. Nace, 113 Md. 460, 482, 77 A. 1121 (1910) Pollack, et al. concede, for the purpose of this appeal, that Summit owed the duty to Athas.
The employer is primarily and absolutely obliged to perform the duty properly. Wood v. Abell, 268 Md. 214, 238, 300 A.2d 665
(1973); Jarka Company v. Gancl, 149 Md. 425, 431, 131 A. 754
(1926). The employer may authorize others, be they called manager, superintendent, middleman, foreman, or whatever, to hire and fire employees, but the duty is nondelegable in the sense that the employer cannot thereby relieve himself of or avoid the responsibility for a failure to discharge the duty to the injury of an employee. Security C. L. Co., 124 Md. at 16. In other words, the employer remains liable in respect to the duty for the omissions or neglect of the person to whom he entrusts the duty Hamelin, 57 Md. at 306-308. See Bartlett-Hayward Co., 120 Md. at 5-6; Penn. Steel Co., 112 Md. at 484-485. Pollack, et al. further concede, for the purpose of this appeal, that Summit delegated the duty to them as co-employees, that they actively assumed the discharge of the duty and that Athas was injured due to the failure of them individually to discharge it.[4] But they urge that they are not
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liable to Athas because the duty to provide competent, peaceful and law-abiding co-employees which they breached ran only from Summit to Athas and not from them to Athas. They argue that “[a]n employee does not have a duty to provide fellow employees with competent, peaceful and law-abiding co-workers.” They claim that “[a]n employee is not liable to a co-employee for the former employee’s failure to discharge his duty to their employer.” They conclude that “[a]n employee injured by a co-employee’s breach of his contract with the employer is not entitled to recover for any such breach.” On the other hand, Athas declares that the duty is not only owed to him by Summit, but also by Pollack, et al., so that Pollack, et al. as well as Summit are liable to him for the negligent failure to perform it.
Both Athas and Pollack, et al. address the matter in the perspective of the common law. The common law relationship between employer and employee, however, was radically changed by workmen’s compensation laws. We believe that, in the circumstances of this case, whether Athas’ amended declaration alleges a cause of action can be determined only upon consideration of the provisions of Maryland’s workmen’s compensation statute.
The Act embodies a comprehensive scheme to withdraw all phases of extra-hazardous employments from private controversy and to provide sure and certain relief for injured workmen, their families and dependents regardless of questions of fault Continental Cas. Co. v. Mirabile, 52 Md. App. 387, 395, 449 A.2d 1176, cert. denied, 294 Md. 652, (1982). It is designe inter alia to preclude tort actions against an employer.[5]
Shining bright and clear from
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the intent of the General Assembly as gleaned from the Preamble to the Act, from the provisions of the Act, and from the cases of the Court of Appeals and this Court interpreting and applying those provisions is the proposition that upon claim and award or payment of compensation by an employer to an employee suffering an injury arising out of and in the course of his employment, no further liability shall inure to the employer. The Preamble to Acts 1914 announces that the relief to injured workmen set out in the Act shall be “to the exclusion of every other remedy, except as otherwise provided in this Act.” Section 15 makes exclusive the liability of an employer to pay compensation. See Kramer v. Globe Brewing Co., 175 Md. 461, 470, 2 A.2d 634 (1938). Section 36, in establishing a schedule for the payment of compensation, declares that “except in this article otherwise provided, such payment shall be in lieu of any and all rights of action whatsoever against any person whomsoever.” The provisos in the Act are clearly delineated, and none permit a law action against an employer if relief has been obtained by way of the payment of compensation. So under § 44 the privilege given an employee whose injury results from the deliberate intention of his employer to have a cause of action against the employer as if the Act had not been passed, is lost if the employee proceeds by way of compensation. Section 58 authorizes proceedings at law against third parties where the injury for which compensation is payable was caused under circumstances creating a legal liability in “. . . some person other than the employer.”
The cases tracing the history of the Act and applying its provisions recognize as the policy of the State that the liability of the employer extends no further when compensation is awarded, and show that it existed from the enactment of the statute to the present time, unaffected by various amendments to the Act. In Hagerstown v. Schreiner, 135 Md. 650, 653, 109 A. 464 (1920) the Court said:
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“As against an employer who has provided the insurance and who has not `from deliberate intention produced such injury or death’ the remedy by compensation under the act is exclusive.”
Hutzell v. Boyer, 252 Md. 227, 232, 249 A.2d 449 (1969), states flatly that the Act “excludes an action in tort by an employee against his employer. . . .” Cases in the intervening years are to like effect. For example, State v. Francis, 151 Md. 147, 149, 133 A. 26 (1926) states that if the injured employee accepts “compensation under the act, such payment must be held as declared by section 36, article 101, to be `in lieu of any and all rights of action whatsoever against any person whomsoever.'” It was said in Kramer v. Globe Brewing Co., supra, at 470: “Under the provisions of the Act . . . the right to sue the employer at common law is only inherent in the employee in cases in which the employer has failed to comply with it; in which latter case the employee . . . has the option of either claiming compensation under the Act, or maintaining an action at common law for damages on account of the injury.” Baltimore Transit Co. v. State, 183 Md. 674, 677, 39 A.2d 858 (1944) put it this way: “There is no doubt that the Workmen’s Compensation Act substituted for the common law liability of an employer for negligence, subject to the corresponding common law defenses, an absolute, but limited, liability regardless of fault, and made that liability exclusive, in the case of a conforming employer.”Transit Co. v. Harroll, 217 Md. 169, 176, 141 A.2d 912 (1958), quoting Barrett v. Indemnity Ins. Co., 152 Md. 253, 259, 136 A. 542 (1927), observed that when an injured employee “claimed and received compensation from the employer and the insurer, she could thereafter proceed only against the intervenin tort-feasor, whose act caused the death of her husband in compliance with the terms of the statute.” Expressed another way, an injured employee “is entitled to only one recovery. . . .” Gray v. State Roads Comm’n, 253 Md. 421, 425, 252 A.2d 810
(1969).
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In the face of the dictates of the Act and the cases applying them, Athas, having proceeded against his employer, Summit, for compensation, acknowledges that he cannot proceed against Summit at law. He concedes that
“[t]he Workmen’s Compensation Law of Maryland is the exclusive remedy of an employee against an employer who negligently fails to create or provide a safe workplace, if the employer has complied with the mandates of that law.”
Our inquiry now turns to whether Athas is entitled to proceed at law against Pollack, et al., who are his co-employees and his employer’s officers and supervisors, despite that he is precluded from proceeding at law against his employer.
Athas could be entitled to proceed at law against Pollack, et al. only if so authorized by § 58 of the Act. The section “creates a special statutory remedy, and the rights of all persons affected by the proceedings are, so far as they are applicable, measured and limited by the terms of the statute.”[6] Barrett v. Indemnity Ins. Co., supra, at 259 See Transit Co. v. Harroll, supra, at 176; Johnson v. Miles, 188 Md. 455, 460, 53 A.2d 30 (1947). He would be entitled to proceed by virtue of § 58 only if Pollack, et al. were third party tort-feasors in the contemplation of the section. We have seen that Summit, as Athas’ employer, is expressly excluded from being a third party tort-feasor. As we see it, the issue, therefore, does not present a determination of the law of agency but rather a determination of the scope of immunity from liability granted by the Act. The issue is alembicated to whether Pollack, et al. share the immunity of Summit.
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We are not referred to an appellate decision in this jurisdiction, nor are we aware of one, which would compel a certain resolution of the issue.[7] We have scanned the cases in other jurisdictions relating to the issue. See Annot., 21 A.L.R.3d 845 (1968 Supp. 1982). State ex rel. Badami v. Gaertner, 630 S.W.2d 175 (Mo. App. 1982) has collated and analyzed them, finding a pronounced split in authority, even considering that results may be based on the wording of
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workmen’s compensation statutes involved. There are various approaches to the issue. One is that the immunity granted the employer under the workmen’s compensation law also applies to employees whose negligence caused the injury regardless of the nature of that negligence. See Witherspoon v. Salm, 251 Ind. 575, 243 N.E.2d 876 (1969); Brown v. Estess, 374 So.2d 241
(Miss. 1979); Madison v. Pierce, 156 Mont. 209, 478 P.2d 860
(1970); Warner v. Leder, 234 N.C. 727, 69 S.E.2d 6 (1952).[8]
This approach is not applicable because it does not reflect the law of Maryland. The immunity granted the employer under our Act does not unqualifiedly extend to an employee whose negligence caused the injury. The Act “excludes an action in tort by an employee against his employer, but does not exclude tort actions between co-employees.” Hutzell v. Boyer, supra, at 232. It permits an employee, “suffering a compensable injury because of the negligence of a fellow employee, to bring a personal injury action against that co-employee.” Hauch v. Connor, et al. 295 Md. 120, 121, 453 A.2d 1207, 1208 (1983), affirming Connor v. Hauch, 50 Md. App. 217, 237 A.2d 661 (1981). See Leonard v. Sav-A-Stop Services, supra, 289 Md. at 208.
Another approach is typified by New Jersey cases. They are bottomed on the theory that in appropriate circumstances the contract duty of an employee to his employer is transmuted into tort duty to a fellow employee. Miller v. Muscarelle, 67 N.J. Super. 305, 170 A.2d 437, cert. denied, 36 N.J. 140, 174 A.2d 925 (1961). See M. Feuer, Personal Liabilities of Corporate Officers and Directors, 216, 218 (1961); W. Prosser The Law of Torts § 93 (4th ed. 1971).
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This approach presents difficulties. It is predicated upon the common law with reliance upon Restatement (Second) of Agency §§ 350-359 (1957). Section 491, comment a, however, states that the liabilities which flow from workmen’s compensation acts are not within the scope of the Restatement of “this Subject.” Miller
does not place sufficient emphasis upon the workmen’s compensation law itself, nor does it correctly assess “the importance of the distinction between those duties which arise solely because of the relationship of employment and those which exist independently of that relationship albeit occurring during the employment.” Gaertner, 630 S.W.2d at 180. We are not persuaded to determine Pollack, et al.’s liability vel non by the application of this approach.
Under a third approach supervisory personnel are liable as co-employees in third party actions under certain workmen’s compensation laws where they negligently perform the duty, delegated to them by their employer, to provide a safe place to work. Examples are found in Ransome v. Hunter, 362 P.2d 282
(Alaska, 1961) and Fraley v. Worthington, 385 F. Supp. 605 (Wy. 1974). This approach involves the concept of vice-principals, that is, one who exercises some recognized common-law nondelegable duty of the employer. Schatz v. York Steak House Sys., 51 Md. App. 494, 496, 444 A.2d 1045 (1982).[9] In any event, we think that the issue before us is necessarily to be resolved under the provisions of our own Act.
A fourth approach deems that a corporate officer or supervisor performs in a dual capacity. He has immunity under the workmen’s compensation law where his negligence is based upon a general nondelegable duty of the employer. To hold him liable something extra is required beyond a breach of duty of general supervision and safety,
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for that duty is owed by the employer, not the employee. This approach has been most frequently expounded by Wisconsin courts See Kruse v. Schieve, 61 Wis.2d 421, 213 N.W.2d 64 (1973) Garchek v. Norton Co., 67 Wis.2d 125, 226 N.W.2d 432 (1975) Ortman v. Jensen Johnson, Inc., 66 Wis.2d 508, 225 N.W.2d 635 (1975); Kruse v. Schieve, 72 Wis.2d 126, 240 N.W.2d 159
(1976); Laffin v. Chemical Supply Co., 77 Wis.2d 353, 253 N.W.2d 51 (1977). Other states have adopted a comparable approach. Neal v. Oliver, 246 Ark. 377, 438 S.W.2d 313 (1969) Zurich Ins. Co. v. Scofi, 366 So.2d 1193 (Fla. App. 1979) Vaughn v. Jernigan, 144 Ga. App. 745, 242 S.E.2d 482 (1978) Collier v. Wagner Castings Co., 70 Ill. App.3d 233, 26 Ill. Dec. 641, 388 N.E.2d 265 (1979); Kerrigan v. Errett, 256 N.W.2d 394 (Iowa 1977); Dawley v. Thisius, 304 Minn. 453, 231 N.W.2d 555 (1975); Blumhardt v. Hartung, 283 N.W.2d 229 (S.D. 1979) Wilson v. Hasvold, 86 S.D. 286, 194 N.W.2d 251 (1972); Steele v. Eaton, 130 Vt. 1, 285 A.2d 749 (1971). This approach is succinctly expressed in 2 A. Larson, The Law of Workmen’s Compensation, § 72.13 (1982): “[M]ost courts will hold [corporate officers, directors and stockholders as co-employees] immune if the act with which he is charged is an act done in his official capacity as an agent or representative of the corporation. Suit is also barred if the duty allegedly violated was a nondelegable duty of the corporation, such as the duty to provide a safe place to work — as distinguished from the duty of care owed by one employee to another.” Professor Larson includes supervisors and foremen as co-employees. He asserts: “Some states have held . . . that a supervisor, like a corporate officer, cannot be held liable by a co-employee for breach of a corporate duty, such as that to provide a safe place to work, but can be held only for breach of a personal duty.”[10]
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The fourth approach is closely aligned with the “alter ego” concept. “If the defendant so dominates the corporation, perhaps as stockholder, president and manager, that he can honestly be said to be the alter ego of the corporation, this in itself may suffice to bar any action against him.” Larson at § 72.13. See Cunningham v. Heard, 184 Ga. App. 276, 214 S.E.2d 190 (1975) Chambers v. Gibson, 145 Ga. App. 27, 243 S.E.2d 309 (1978).
We shall apply the concept expressed in the fourth or “Wisconsin” approach in determining whether Pollack, et al. are subject to or immune from a suit at law by Athas for their negligence in performing the duty of Summit, delegated to them. We believe that the approach developed by the Wisconsin courts is more in accord with the intent of our legislature in enacting the Workmen’s Compensation Law, with the philosophy behind and the specifics of the provisions of that Act, and with the interpretation and application of those provisions by the appellate courts of this State. We are in full agreement with the reasons stated by the court in Gaertner for adopting the “Wisconsin” approach:
“It was the purpose of the workmen’s compensation law to place the burden of employment accidents upon the employer and ultimately upon the consuming public generally. To accomplish this purpose, the employee was entitled to recover for such accidents without the necessity of establishing negligence and was freed from defenses such as fellow servant, contributory negligence and assumption of risk. The employer on the other hand received immunity from general tort liability and damages and received an established basis for determining the extent of its monetary liability. The purpose of the Act was not to transfer the burden of industrial accidents from one employee to another. Clearly, plaintiff’s suit here is an attempt to do that.” 630 S.W.2d at 180.
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And we are especially impressed with Gaertner’s evaluation of the practical aspects:
“Further, we need not avoid consideration of the practical effects of upholding liability of defendants here. Under present day industrial operations, to impose upon executive officers or supervisory personnel personal liability for an accident arising from a condition at a place of employment which a jury may find to be unsafe would almost mandate that the employer provide indemnity to such employees. That would effectively destroy the immunity provisions of the workmen’s compensation law.” Id.
Like reasoning, even more elaborately expressed, is found in the comprehensive dissenting opinion of Summers, J. in Canter v. Koehring, 283 So.2d 716, 728-732 (La. 1973), in which a workmen’s compensation act containing provisions comparable to § 58 in our Act is involved. We adopt the fourth approach.
We repeat in summary the facts before us. They are established for the purpose of this appeal by averments in the declaration, admissions in the pleadings and concessions by the parties. Athas, Hill and Pollack, et al. were co-employees of Summit. Summit authorized Pollack, et al. to perform the nondelegable duty owed by it to Athas as its employee, to provide a safe place to work by the employment of competent, peaceful and law-abiding co-employees. Pollack, et al. assumed the discharge of the duty, and, with respect to Hill, failed to carry it out properly. Athas, as a result of the negligence in the hiring of Hill or the retention of him as an employee, suffered an injury arising out of and in the course of his employment. Athas proceeded against Summit for compensation and it was awarded.
We apply these facts to the law encompassed by the approach which we endorse. Summit paid for the injury suffered by Athas at the hands of Hill by way of workmen’s compensation. That exclusive remedy satisfied in full
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Summit’s liability to Athas. Whether or not Pollack, et al. were realistically the alter ego of Summit, they acted solely as the representative of their employer in their official capacity with respect to Summit’s nondelegable duty, as distinguished from the general duty of care owed by one employee to another. Therefore, there were no circumstances “creating a legal liability in some person other than the employer to pay damages . . .” under § 58 of the Act. In relation to the injury suffered by Athas due to the conduct of Hill, Pollack, et al. stood in the shoes of Summit, and were not “some person other than the employer.” In short, they share Summit’s immunity from a suit at law.
We hold that the court below did not err in sustaining the demurrer of Pollack, et al. without leave to amend.[11]
Judgment affirmed; costs to be paid by appellant.
APPENDIX A
The Amended Declaration of Athas alleged that Athas and Hill were employees of Summit, that Pollack was its Managing Agent and President, and that Hurwitz and Rosenfeld were its Vice-president and House Chairman respectively. The Declaration further asserted that Pollack, et al., and each of them, assumed “the supervisory and immediate duties of personnel management and direction, discharging and otherwise directing the activities of the employees.” It declared that Hill had a violent character and disposition which was known to Pollack, et al. by virtue of Hill’s “violent background” and his previous altercations on the premises of Summit, all of which was unknown to Athas. It stated that Pollack, et al. had failed to warn Athas of Hill’s violent character and disposition and otherwise took no steps to insure his safety. It set out that Athas, in the course of his employment, was assaulted and seriously injured by Hill. With respect to the demurrer, these facts are assumed to be true.
Section 58 establishes a three-pronged authorization for suit at law against a third party tort-feasor. Its provisions are neatly summarized in Baltimore Transit Co. v. Worth, 188 Md. 119, 141, 52 A.2d 249 (1947):
“[I]t is provided substantially that where an employee is injured and the injury is one for which Workmen’s Compensation is payable and the injury was caused under circumstances creating legal liability in a person other than the employer, the employee may proceed either by law against the third person for damages or against the employer for compensation, or in case of joint tort feasors against both. [(1st prong)] The employer, if compensation is awarded, may enforce for his benefit the liability of the third person, provided if damages are recovered in excess of compensation awarded and certain expenses, then such excess shall be paid to the injured employee. [(2nd prong)] If the employer shall not within two months from the award by the Commission start proceedings to enforce the liability of the third person, the injured employee may himself enforce such liability with a provision that if damages are recovered, the injured employee may retain the expenses and costs of the action and the employer shall be reimbursed for the compensation awarded and specified expenses. The balance in excess of these items shall enure to the injured employee. [(3rd prong)] Finally, the amount thus received by the injured employee shall be in lieu of any award that might otherwise have been made thereafter in the same case under the provisions of the Workmen’s Compensation Act.”
Section 58 is set out in its entirety in Appendix A hereof.
that [Athas] was precluded from maintaining a common law action against officers of his corporate employer for their negligence in causing his injuries.” We held that the Motion was not the proper vehicle to inquire into the sufficiency of Athas’ Declaration. We emphasized that “we venture no opinion whatever as to the sufficiency of [Athas’] Declaration in this case.”
The Workmen’s Compensation Act of Pennsylvania was also amended to exempt a fellow employee from liability, except for intentional wrongs, when the disability or death is compensable under the Act. 77 Purdon’s Pa. Stat. Ann. § 72 (Act August 24, 1963, P.L. 1175, No. 496, § 1.) See Martin v. Wood, 400 F.2d 310, 311, n. 1 (3rd Cir. 1968).
(1912).
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