Document 8VO7N2gy243ajJ7GonO7pX5aa

Liability of Co-Employees by Judge James O. Haley Jefferson Circuit Court, 10th Judicial Circuit Historical Background It. no doubt, is safe to start this article with the state ment that the history of co-employee suits under the Alabama Workmen's Compensation Law in recent yean has been a stormy one. This, of course, is tied in with the development of workmen's compensation laws throughout the world. The initial concept of workmen's compensation in America was not origi nated by English Common Law, but instead began in Germany in 1884. Workmen's compensation did not gain widespread acceptance in the United States until uncompensated industrial injuries became such a prob lem that legislators felt the need to remedy the situation. The Alabama Legislature passed a Workmen's Com pensation Act in 1919 and the Act. as originally passed, gave to the injured employee or to his dependents in the case of his death the option to accept workmen's com pensation benefits or to pursue his remedy against a third party, but not both. In 1947 the Act was amended so as to afford to the injured employee or his depen dents in case of his death the right to accept benefits under the Act and also to proceed against "any party other than the employer" who might be legally liable. We thus see that prior to 1919 there was no law that deprived an injured employee ofa right ofaction against a fellow employee tor injuries negligently inflicted. As a practical matter, however, suits of this type were not filed because then the co-employees had no liability coverage and it is a known fact that it takes liability insurance to make cases of this type worthwhile. Then from 1919 until 1947 co-employees were im mune from liability by virtue of the provisions of the 'Prroarrd for tat of Alabama Circuit Judges at their mid-winter conference at the Cumberland School of Law. Samford University. Birmingham. Alabama. Jan II. 1979. workmen's compensation law. Under the present hold ing of the Supreme Court this provision probably was unconstitutional, but it at least was considered constitu tional during that period of time. From 1947 until 1970, when the case of.United Slates Fire Insurance Co. y. McCormick, 286 Ala. 331.243 So.2d 367, was decided, it was generally considered by the legal profession that suits ofthis nature couid not be maintained by reason of the fact that the executive officers and co-employees were immune on the theory that they in law enjoyed the same status as an "employer" for immunity purposes. The Alabama Supreme Court, however, in the McCor mick case held that a co-employee can be held liable hr damages fbr injuries negligently inflicted upon a fellow employee and said in part as follows: "To hold a co-employee is not a person other than an employee would be the equivalent of saying an employee is an employer, and this we cannot do." Finally the Court held. "We hold that the words in Title 26, Sec 312. as amended, in pan. 'other than the employer' permit co-employees to be treated as third parties." After the McCormick decision was handed down a deluge of suits were filed against corporate officers, directors, executives and co-employees by workers who were injured on the job and who had been paid and who had accepted workmen's compensation benefits. In response to the McCormick decision, the Legisla ture in 1973 amended Sec. 312 (now Sec. 23-5-11, Code 1973) to provide: "Neither an officer, director, agent, servant or employee of the same employer nor his personal representative . . . shall be considered a party other than the employer." The validity ofthe 1973 amendment was immediately challenged on the belief by many that a legislative 1ft TXTINER RMC0086123 "slip-up" occurred and that this section which purpor tedly took away the right to sue fellow employees was, in fact, not passed by the Legislature. This section did. however, appear in the code, but its validity was not finally passed upon by the Supreme Court until the case ofChilders v. Coney, 348 So.2d 1349 (1977) was handed down. The Court in the Childers case upheld the valid ity of the 1973 amendment. Since it was a known fact that the validity of this amendment was being seriously challenged, the Legislature in 1973 reenacted the same provision to take care of the situation in the event the 1973 amendment was held invalid. Thus from 1973 until 1975 no lawyer orjudge knew whether suits of this type could be maintained or not but many were filed. After the 1973 amendment was passed, it was generally con ceded that it did insulate co-employees from suits, but some attorneys still contended that the amendment was unconstitutional and continued filing such suits. In 1977. when the Supreme Court in the Childers case held chat the 1973 Act was constitutionally passed and thus valid, ail of the claims that arose subsequent to *1973 were subject to dismissal. The Court did. however, observe in the Childers decision that the constitutional ity of the Act was not challenged and. therefore, this was not being decided. As the law stood, however, those claims that arose in the interim period certainly were due to be dismissed and many were either on a motion to dismiss or on a motion for summary judg ment. To complicate the issue more, the U. S. District Court for the Middle District of Alabama in the case of Barr v. Preskitt, 389 F. Supp. 496 (1973), held.that the 1973 amendment was retrospective in application. This obviously was an unsound ruling and was repudiated by our Supreme Court in the case ofSewell v. Harris, 331 So.2d 566. (1977) and our Court writing through Justice Maddox said. "We hold that there is no apparent Legis lative intent in the 1973 amendment to Sec. 312 that it should be applied retrospectively." We now have a situation where an injured employee who was injured prior to 1973 could sue a fellow employee but one in jured after 1973 could not maintain such a suit. This status was short lived, however, for in May, 1978 the Supreme Court in the case of Grantham v. Denke. 359 So.2d 785, held the 1975 amendment unconstitutional and concluded the opinion by saying: "We, therefore, conclude that Sec. 13. Constitu tion of Ala., 1901, limits the power of the Legisla ture to enact the 1973 amendments to Sec. 312, Tit. 26. Code 1940 (Sec. 25-5-11 Code 1975) which would bar negligence actions for damages by an injured employee against her or ha co-employees. Those amendments violate Sec. 13 and cannot have their intended effect." As the law is now interpreted, the right of a co employee to sue a fellow employee has existed since 1947. Death Actions When the Grantham case was decided, the Court made no mention of death actions. Immediately the contention was raised that the immunity provision still was good insofar as suits against co-employees for wrongful death was concerned. The reasoning was that the Court in Grantham held the act immunising co- employees from liability unconstitutional that the employee had the right to sue a fellow employee at common law and it was beyond the power ofthe Legis lature to take this right away from them. There was no right to sue for wrongful death at common law and, therefore, it was contended that that portion of the Act immunizing co-employees from liability for wrongful death was valid. The Supreme Court, however, in the case ofKing v. Landrum, 13 ABR 343, apparently set tled the issue by bolding that the dependents of a de ceased workman would have the right to sue a fellow employee. The Court did not discuss the issue but it did say, "This appeal involves two issues: 1. The effect of federal removal statues on Ala bama appellate procedures. 2. The right of the widow of a deceased employee covered by Workmen's Compensation to sue a co-employee of the deceased." The opinion was concluded by the following state ment: "The second issue involves the immunity provisions of Title 26. Sec. 312. Code 1940. as they pertain to actions against co-employees. The circuit court's grant of summary judgment in favor of Landrum and Reeves on the basis of these Code sections was erroneous. Grantham v. Denke, 359 So.2d 785 (Ala. 1978). [Editor's Mow: Oa Apri 4. 1979 tiw Alabama Snprs-- Cost, a Stagie *. Parker._____AB* __ btM tfeat co laidoyra oar am bo wed whoa their aeshamco rentes ia the deam at s Mow eapksyes. j What About Those Saits That Were Dismissed or Resulted in Summary Judgments Based Upon the Childers Decision? As above stated, many cases that were filed prior to the Childers decision and were still pending when it was handed down were dismissed or had summary judg ments rendered in fevor of the co-employees. Almost invariably, motions have been filed to reinstate. Many trial judges have considered that Rule 60 should be given a liberal interpretation and have been reinstating such cases even though the time for appeal has expired. This seems to be a proper approach. In Jefferson County we have had a number of cases where a co-employee was not sued during that time interval and now the plaintiff is attempting to add one or more even though the claims are barred by the statute of 13 086124 limitations. It is being contended that the plaintiff was prohibited from filing suit against the co-employee by virtue of the 1973 and 1975 amendments and. therefore, the statute did not commence running until the Act was held unconstitutional. They rely upon Sec. 6-2-12, Code of Ala.. 1975 which provides in part as follows: "When the commencement of an Act is stayed by injunction or statutory prohibition the time of the continuance of the injunction or prohibition is not computed as a pan of the limitation time." This contention probably is not well founded al though there is no decision of the Alabama Supreme Court which could be considered as a direct authority. Our Coun did in the case of Vann v. Rogers, 225 Ala. 186. 142 So. 539 (1932). consider this section of the Code but in an entirely different factual situation. Our Coun did say that Sec. 6-2-12 "clearly indicates a reference to Coun procedure whereby the commence ment ofthe action is 'stayed' and could not property be construed as having reference to a mere consequential inability to sue under said Section ..." The Illinois Coun in the case of Peterson v. Mon tegna < Co., 136 N.E. 2d 586 (1956), did consider a very similar factual situation and held: "An unconstitutional statute is null and void as of the date of its enactment. It is not a law. It confers no rights, imposes no duties and affords no protec tion. It is in legal contemplation, as inoperative as though it had never been passed." The Supreme Coun ofGeorgia in the case ofHarris v. Cray, 49 Ga 585 (1873) considered the same legal ques tion and held: ' . . . [Tjhat part of the constitution of 1968 which prevented him from suing, was void, as declared by the Supreme Coun of the United States. He was not legally prohibited from suing. It is said, how ever, that practically he was prohibited; that the highest tribunal ofthe State so held. But a void law is no law; the plaintiff had a plain remedy. If the Judge of the Superior Coun dismissed his suit he should have appealed to this Court, and if this Coun refused him his rights, he had the right, and it was his duty, to resort to the Supreme Coun ofthe United States. On the question involved, an appeal would lie by writ of error. It is not true, therefore, that he was prohibited from suing. He ought not to have submitted to the dismissal of his suit in 1870. It is no reply to say that the Supreme Coun of the State agreed with the circuit judge. In all cases where there is an appellate tribunal the legal ques tion in dispute is not finally decided until the final tribunal has passed upon it. One might just as well say he acted on the opinion of a Justice of the Peace, or a Judge of a County Coun, or the Judge of the Superior Coun. From each of these there is an appeal finally to this Coun. and on certain ques tions from this Coun to the Supreme Coun of the United States. We know of no justification for stopping at one point in the series rather than another. It will occur that Justices. Superior Court Judges, and Supreme Court Judges, will err. In such cases the only remedy is to appeal, and until the appellate tribunal has passed on the question no person has a right to consider it settled. Every man must see to his own rights. If a Judge or a Coun. even the highest Court ofa State, decides one man's case, and he submits to the decision, and another man. whose case is decided on the same principle, appeals and has the decision reversed, the party who failed to appeal gets noth ing by the superior pluck or perseverance of the appellant. Nor can he complain. He could have gotten the same result by the same process. We conclude, therefore, that the plaintiff was not prevented. True, the Judge so held, but the Judge was wrong, there was no valid law prohibit ing suit. That pan of the constitution of the State is either good or bad. If it is good, the plaintiff's suit falls by it. If it is bad and allows hime to sue now, it was always bad, and he could always have sued. What Does It Take to Prove Liability Against Co-Employees? We now face the critical issue as to what it takes from ' an evidentiary standpoint to establish liability against a co-employee or an executive officer. The problem is not difficult insofar as co-workers are concerned. Two men are working side by side and one causes a steel beam to fall and hit the other one. That case involves a simple issue as to whether or not the defondant was negligent in the manner in which he performed his work. It is just a case of common law negligence. But cases of this type usually are not brought because follow workers are seldom covered by insurance. Ifhe is a defendant in the case, most likely he is there for the purpose ofprevent ing a removal to Federal Court. The problem arises when the plaintiff sues a supervisory employee or executive who is. not actually performing work but who is covered by the employer's insurance. I will discuss the insurance coverage question briefly a little later on. Who Are Executive Officers? Some of the factors to consider in determining the status of an executive officer are: Managerial responsibility for affairs of corpora tion. Relationship with corporation. Authority to make or alter contract terms, condi tions or procedures. Nature of duties and responsibilities. Authority to hire and fire. Responsibility for formulation ofcorporate policy. Whether paid on hourly basis or salary. Totality of employment situation. Officer, director or stockholder of company. 14 TX TIMER RMCOO80125 Many cases can be found from other states discussing the liability of company executives for injuries received by an employee of a company. Because of the dirth of Alabama authority on this point it is necessary to look to the decisions ofother courts. Our Supreme court has. however, in the case of United States Fidelity & Guaranty Co. v Jones. 356 So.2d 396 (1977) (which will be discussed later on) been about as liberal in imposing liability against an insurance company for negligent inspection as any court in the land and we, therefore, might reasonably expect that it wifl adopt the holding of the liberal courts on the question of the liability of executive officers. This speculation is based in part upon a provision of oar Coda, Sec. 25-1-1 which reads as follows: (a) Every employer shall furnish employment which shall be reasonably safe for the employees engaged therein and shall ftirnish and use safety devices and safeguards and shall adopt and use methods and processes reasonably adequate to render such employment and the places where the employment is performed reasonably safe for his employees and others who are not trespassers, and he shall do everything reasonably necessary to pro tect the life, health and safety ofhis employees and others who are not trespassers . . . (c) For the purposes of this section, the following terms shall have the meanings ascribed to them by this subsec tion: (1) Employer. Such term includes every per son. firm, corporation, partnership, joint stock as sociation. agent, manager, representative, fore man or other person having control or custody of an employment, place of employment or of any. employee, but the termaofthis section shall not be construed to cover the employment of agricultural workers of domestic servants. It is noted chat "employer" is defined as a "person having control or custody of any place." By the very wording of the section it includes a foreman. Can this section be construed to mean that there is an absolute duty on the employer and/or those executive officers to whom the duty has been delegated to furnish the em ployee an "absolutely" safe place and tools and ma chinery for the performance of his work? The answer probably is "no." It would seem that the rule should be that the company has the right and duty to designate to certain employees the duty to see that the premises are reasonably safe and that said employee is liable to an injured employee ifhe negligently foils to discharge this duty. This probably would include the duty to warn the employee of any risk ofharm and to acquaint him with any dangers in and about the premises or procedures of which he works. Hill v. Metal Reclamation. Inc., 348 So.2d 493 (Ala. 1977). In Hill the employee was suing his employer (they were not subject to the provisions of the Workmen's Compensation Law) but what the Court said with reference to the duty of the employer might well be said concerning the duty of the employee to whom the employer had delegated the duty of advising employees with reference to safety. This would'be es pecially true ofa small corporation where the defendant is the owner of most or all of the stock of the company and in that situation he might be held to the same duty to the employee as the employer (company). Neal . J. P. Oliver. 438 S.W.2d 313 (Ark. 1969). The states of Louisiana. Wisconsin and Minnesota probably have developed more case law on this ques tion than any other states. The Louisiana decisions are more liberal in holding executives liable and the Min nesota and Wisconsin states are conservative in that respect. The Louisiana Court in the case ofGalloway *. Employers Mutual of Wausau, 286 So.2d 67611974). laid down what appears to be a sound practice by which the liability of executive officers or employees should be gauged. That rule is: The employer must owe a duty of care to the eo> - pioyee. That duty is delegated by the employer to the indi vidual defendant. That duty was breached by the defendant through his own personal feult, whether by malfeasance, misfeasance, or nonfeasance. That personal liability cannot be imposed on the individual just because he has some general ad ministrative responsibility. Rather, he must have a personal duty toward the injured plaintiff. He may delegate the duty or responsibility to a subordi nate. and hence escape personal liability but only if (a) he is not personally at feuk in creating the unsafe condition, or (b) he can show he did not personally know or should not be charged with constructive knowledge of the fact that the dele gated duty is not being discharged and (c) with authority to do so. he nevertheless foils to remove, the danger or risk. Defeases The legal defenses available to co-employees win have to be decided by the Supreme Court. It will be contended by defense attorneys that the common law defenses of assumption of risk and the negligence of fellow-employees are available. They will rely heavily upon the decision of the Supreme Court in the case of Foreman v. Dorsey Trailers, Inc.. 236 Ala. 253, 254 So.2d 499 (1951). The Court in that case did say: " Except as modified by statute, a servant assumes the risk ofinjury caused by a fellow servant. This is the common law doctrine. Boggs v. Alabama Consol Coal iron Co.. 167 Ala. 251. 52 So. 878." The Court in that case stated that: "If the duty to maintain the premises in a rea sonably safe condition has been delegated, then the doctrine applies." The plaintiff on the other hand will contend that the fellow servant and the assumption of risk defenses are 15 TX TIMER RMC0086126 available co the employer only, since these common law defenses were applicable only in employee v. employer cases. It is doubtful that our Supreme Court will hold that these two common law defenses are available to a co-employee. When rulings on those defenses have been made, most of the co-employee defenses will boil down to not guilty of negligence and contributory negligence. It is suggested that on a defense of "not guilty" the defendant, in its answer or at a pre-trial hearing, should be required to specify with particularity his conten tions. i.e.: Whether there was any duty on him to exercise care to the plaintiff. Whether there was an acceptance by him of any delegation of responsibility. Whether he (the defendant) had delegated the par ticular responsibility for safety to a responsible subordinate. Whether the negligence ofthe particular defendant was the proximate cause of the plaintiff* s injury. The defense of contributory negligence is available. In almost all cases the issue of contributory negligence is one to be decided by thejury. Cases involving "obvi ous and known" danger seldom, .if ever, warrant a directed verdict on the issue ofcontributory negligence. Our Court in the case of USF&.G v. Jones, supra, made the following observation: "Appellant next contends that contributory negli gence was proved as a matter oflaw. The burden of this plea is uponthe defendant. The question is one of law for the Court only when the bets are such that all reasonable men must draw the same con clusion therefrom. It is a question for the jury when, under the bets and circumstances, reason able minds may fairly differ upon the issue ofnegli gence. Baptist Medical Center v. Byars, 289 Ala. 713. 271 So.2d 847 (1972) Southern Railway Co. v. Carter, 276 Ala. 218. 160 So.2d 628 (1963) and Mackintosh v. Wells. 218 Ala. 260. 118 So. 276 (1928). This, however, cannot be viewed from the vantage ofhindsight. The fact that a jury did not find contributory negligence is no evidence that it was properlysubmitted to the jury in the first in stance. Thought is is apparent that Jones had knowledge of the hole. Ms appreciation of the danger of that opening, the voluntariness of his encounter with the danger, and his use of due care were Wypes properly submitted to the jury. Beasley, supra. As to these requisites of the defense of contributory negligence, the burden of proof rests upon U.S.F.&G.: and this issue, submitted on approp riate instructions, was resolved by thejury adverse to the defendant. Beloit, supra: Alabama Power Co. v. Mosley. 294 Ala. 394. 318 So.2d 260 (1973): Kinssherry Homes Corp. v. Ralston. 283 Ala. 600, 233 So.2d 371 (1970) and Mackintosh, supra." Coverage QuestLo The question ofthe construction ofinsurance policies as to whether or not certain employees are covered or not is too far reaching to discuss in this paper except in a cursory manner. It is safe to say that many of the trial judges will be called upon to decide whether or not named defendants in damage suits are entitled to the coverage of the employer's policy. The insuring agreements of policies are couched in different wording but most of them give the following definition of the term insured: "Unqualified word insured includes the named in sured and also any executive officer, director or stock holder thereof while acting within the scope of his duties as such." The big question that is usually raised is whether the particular employee is covered by that provision ofthe policy. In the McCormick case, supra, our Supreme Court held that the president, vice president, (who acted as general superintendent on the job) and the sewer foreman on the job (who was in charge of some 8 to 10 men) all were covered by the policy. This was done without discussing the activities or the duties per formed by the three employees. Since the Court held that a foreman who had 8 or 10 men workingunder him `was an executive officer it has been contended that all foreman are.covered by the policy. This is not the case, however. Judge Lynn in the case otUnisedStases Fidel ity dk Guaranty Company v. Warhurst, 336 F. Sapp. 1190, had the following to say with reference to the McCormick opinioa: "The Court is well aware of the Alabama Supreme Court's decision in United States Fire Ins. Co. v. McCormick. 286 Ala. 331. 243 So.2d 367 (1970). wherein it was summarily held that a corporate president, vice-president, and sewer foreman were "executive officers" within the meaning of an in surance policy using language substantially identi cal to that ofthe policy under consideration. How ever. after carefully probing both the published opinioa and the unpublished record of the McCor mick case, the Court believes that the Erie doctrine does not require a mechanical extension of the result reached in McCormick to the fects of the case at bar. It is to be observed that there is insuffi cient tactual data presented in the McCormick opinioa to determine whether, in classifying the sewer foreman, the Alabama Supreme Court con sidered the positive criteria of "executive officer" status repeatedly emphasized by the Fifth Circuit. Moreover, it would not seem amiss to infer from the available records that instead ofindependently determining whether the corporate president, vice-president, and sewer foreman were each to be accorded "executive officer" status, the Alabama court may well have classified the three defendants in an "all or none" fashion. In any event, this Court is not convinced that the Supreme Court of 16 txtiner RMC0088I27 Alabama intended to establish an ironclad rule to (he effect that all plant foremen or supervisors wielding authority comparable to that of the sewer foreman involved in McCormick should be treated as "executive officers'* of their respective corpo rations. Absent such a categoric rule, the Court is impelled to follow the rationale of the Fifth Circuit decisions hereinbefore cited, and to find that de fendant Warhurst is not an "executive officer" of King Stove St Range Co. within the coverage ofthe policy at issue. Our Supreme Court in the case of Wolsey v. Aetna Casualty Co. A Surety Co., 346 So.2d 952 (1977) mfopted the Louisiana Rule and held that a foreman wader the facts ofthat case was not an executive officer. "The sole issue is whether Butler, a foreman, was an executive officer within the meaning of the United States Fidelity St Guaranty policy so as to . make him an insured under that policy. We hold that in this case the foreman was not an executive officer under the meaning of the insurance policy and was not due to be defended by United States Fidelity St Guaranty. The evidence was that Butler was employed by Naughton Equipment Co. as a foreman and wel der: he was paid on an hourly basis: he was not an officer, director or stockholder of the company; and he had no authority to make corporate policy or to make contracts on the company's behalf. We adopt the principle expressed in numerous Louisiana cases that an executive officer exercises managerial responsibility for the affairs of the cor poration generally, while an employee does not. Annot.. 39 A.L.R. 3d 1434 (1971) (citing, inter alia. Bruce v. Travelers Ins. Co.. 266 F.2d78l (5th Cir. 1959): Guillory v. Aetna Ins. Co.. 415 F.2d650(5th Cir. 1969): Employers' Liab. Assurance Corp. v. Upham. 150 So.2d 595 (La.App. 1963). Applying this principle to the evidence, it is clear that Butler was only an employee, not an executive official. Such a finding is not contradictory ofUnited States Fire Ins. Co. v. McCormick, 266 Ala. 531, 243 So.2d 367(1970)." Time and space does not permit a more in depth dis- otssion of the question as to "Who is an Executive Officer." It can be stated, however, that the title of a particular employee is not controlling. You must look to im authority to determine whether be does, in fact, cnercise managerial responsibilities as opposed to pvely ministerial and as usual each case wiQ have to be Acided on the basis of the particular facts involved. Subrogation The plaintiff in all cases in which co-employees are ffie defendants has been paid, or is entitled to receive, workmen's compensation benefits and. therefore, the employer or its insurance carrier is entitled to subroga- ion. How to handle these subrogation claims presents grobiems. Historically the workmen's compensation carrier has intervened and become a party plaintiff by intervention but the Supreme Court in the case of Hughes v. Newton. 295 Ala. 117. 324 So.2d 270 (1975), held that. "When the same insurance carrier has the liability coverage and the workmen's compensation cover age 'unencumbered' intervention under Rule 24 ARCP should not be allowed in view of the patent conflict of interest and the inherent potential for collusion." In a big percentage of these cases the workmen's compensation carrier also has the liability coverage on the individual defendants. The Court did hold that in such a situation "encumbered" intervention precluding active participation as a party plaintiffwould be proper. This simply means that an encumbered intervenor can not in any wise participate in the trial but it can have its subrogation rights protected by a proper judgment entry just as though it had participated. An "unencum bered" intervenor has the right to fully participate in the trial and when that is allowed, the workmen's compen sation payment becomes an issue in the case and tes timonyis allowed on it and. also, the jurors would be qualified as to their interest in the compensation insur ance carrier. The law is definite that no effort shall be made-to let the jury know that compensation benefits have been paid in any case where the intervention is an encumbered one. As to whether or not it is proper to qualify the jury as to their interest in the subrogation insurance carrier when the intervention is encumbered and when that company does not have the liability coverage has not been decided but it probably would be proper to do so. Up until the decision in the case of Jones v. Craw ford. 12 ABR1661, there was uncertainty as to whether or not an injured employee could recover for medical expenses which he did not pay or become obligated to pay but which, in fact, was tarnished by and paid by the workmen's compensation carrier. The Jones case, however, laid to rest any uncertainty in that regard and held definitely that such expenses are recoverable and further that the defendant should not in any wise suggest to thejury that the plaintiffdid not pay them. As early as 1960 in the case of Liberty Mutual Ins. Co. v. Manasco. 271 Ala. 124,123 So.2d 527(1960). our Court has been committed to the tact that the workmen's compensation carrier had no subrogation rights for medical expenses and it still has none. It. therefore, follows that pursuant to the Jones decision the plaintiff is permitted to recover for medical expenses which he neither paid nor became obligated to pay. The Court reasoned that if there were to be a windfall as between the injured part and the tortfeasor, the benefits should fall upon the injured person. Using the exact language of Justice Bloodworth. I quote: ''Certainly, if there must be a windfall it is TX TIMER RMC0086128 17 more just that the injured party profit therefrom rather chan relieving the wrong doer of his full responsibility of his wrong doing.'' The judge in the Jones case permitted the plaintiff*s attorney to delete the name of the insurance company from the hospital and medical bills. The Supreme Court approved of chat procedure and stated. "We follow the rule that any showing that the plaintiff has received insurance benefits from his injuries is prejudicial to his case and should not be permitted." As has been demonstrated, the trial judge will enter an appropriate judgment protecting the rights of the insurance carrier when final judgment is rendered. The question then is raised as to the fee to be paid to the plaintiff's lawyer for effecting the recovery. Ala. Code. Sec. 25-5-11c (1975) provides: *`In any settlement made under this section with a negligent third party by the employee .... the employer shall be liable for that part of the attor ney's fees incurred in the settlement with the third party, either with or without a civil action, in the same proportion that the amount of the reduction in the employer's liability to pay compensation bears to the total recovery had from such third parry. The policy behind this section has been ex pressed by the Alabama Court of Civil Appeals in Baggett v. Webb, 46 Ala. App. 666.248 So.2d 275, 279 (Ala. Cir. App. 1971): "It is clear that at least one ofthe purposes of Sec. 25-5-11(c) was to grant to the employee . . . some relief from the expense of his bringing the third party action and thus saving the employer or his carrier from paying some or all of the due compen sation. or ifcompensation had been paid, recovery of some or all of it." Usually the insurance carrier is going to vigorously resist the payment of a lawyer's fee to the plaintiff's attorney. They like to have the choice of the attorney who is going to represent them and in most cases they do. in fact, hire a lawyer who attempts to assert the chum by intervention. It is quite natural, therefore, that they would prefer to have their own attorneys collect the fee rather than pay it to an attorney whom they did not select. The Batten case and the excellent article written by justice Richard L. Jones before he became a member of the Supreme Court appearing in 26 A/a. Lawyer 296. 299 (1965) plus the Code Section and Antram v. Stuyvesant Life Insurance Co., 291 Ala. 716 (a case recognizing the right of the attorney to bepeida fee) are the only authorities that I can cite on the ques tion. No big problem arises, as a rule, concerning re covery for the payments already made. The con troversy usually centers around the cancellation of the benefits not yet accrued. The insurance company should be required to pay a fee for both the recovery of beaefits previously paid and for the savings on those benefits which would have been due and payable in the future. A factual finding as to the future benefits saved will have to be made and when that is done it would appear that the carrier should be required to pay on the basis of that saving at the same rate it paid for the recovery of money already paid out. The mathematics of determining the fee to be paid plaintiff's attorney for savings effected for the insurance company should be checked carefully to be sure that he is not being paid twice for the same recovery. For example, suppose the net recovery over and above the benefits previously being paid is S10.000. but the savings to the insurance company on unaccrued beaefits is S3,000.00. The plain tiff has not received the S3,000 and never will, but he could have gotten it without any effort on his part. He, therefore, should pay a foe on the basis of a $7,000 recovery and the insurance company on the basis of a S3.000 savings. This would give plaintiff's attorney his full fee for the $10,000 recovery and both the plaintiff and the insurance carrier would be paying its pro rata part. It is understandable that you now are confttsed about the mathematics involved, but I can assure you that the more thought you give to the problem the more coaftised you will become--read Justice Jones' article, supra.' Suits Against Insurance Carrier for Negligence in Conducting Inspec tions The 1975 amendment attempted to immunize insur ance carriers from liability for negligence in inspecting premises. The Supreme Court in the Grantham case did not discuss the constitutionality of the Section as it relates to insurance carriers and so for has not directly ruled that insurance carriers are not immune. Some attorneys still are contending that the 1975 Act is valid insofor as insurance carriers are concerned. I cannot see any logic to this argument It seems clear that ifthe Legislature haa no power to grant immunity to coemployees it has no power to gram immunity to insur ance camera who are negligent in conducting their in spections. The Supreme Court in the case of Beasley v. Mac Donald Engineering Co.. 287 Ala. 189, 249 So.2d 844 (1971). after analyzing cases from many jurisdictions and after discussing the various pros and cons ourCourt said: The same reasoning appiys to performing safety engineering services. The role of the carrier is to respond financially in case of injury to employees of its insured. If safety engineering is negligently performed by one "other than the employer" and the employee is injured, he can proceed against the safety engineer. It is immaterial as to whether the 18 TX TIMER RMC0088129 insurance company has a duty to inspect or < whether it receives extra compensation for the safety inspections. A gratuitous inspection ifnegli gently made will impose liability. The most recent, and probably the most far reaching, decision of our Court on the question is the case of United States Fidelity A Guaranty Co., v. Janes, supra. Some courts have applied the Second Restate ment of Torts, Sec. 324(a) which provides: One who undertakes, gratuitously or for considera tion. to render services to another which he should recognize as necessary for the protection ofa third person or his things, is subject to liability to the third person for physical harm resulting Grom his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care in creases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person,or (c) the harm is suffered because of reliance ofthe other or the third person upon the undertaking. It is significant to note that our Court has rejected this Restatement and apparently has held that requirement **c" of the restatement is not necessary in Alabama. If that is the holding ofthtJones case, and it apparently is, it indeed places Alabama in the "liberal" column in sofar as placing liability on insurance carriers for negli gence in inspecting, -bat to Expect in the Future The right to sue co-employees in both personal in juries and death actions now exists. We can be sure, however, that the issue is not forever settled. Justice Maddox in the case ofGardner v. Bethea. 13 AfiR 29. in a spedaily concurring opinion stated: "I concur only because Grantham v. Denke, 359 So.2d785(Ala.. 1978) does control. I registered my dissenting views in Grantham v. Denke, at length. I failed to persuade a majority of the Court in that case chat it had erred: therefore, Grantham v. Denke is the taw of this state, at this time. Unless and until Grantham is revisited, an event not likely to occur within the foreseeable future. I see no justifiable reason to continue to register my dis senting views. I reserve the right, however, to overrule Grantham, if, and when, 1 can persuade a sufficient number of justices on this Court that Grantham is wrong." Whether Justice Maddox win be successful in per suading a majority ofthejustices to overrule Grantham is a question that I cannot answer. I do know for sure, however, that an effort will be made to amend the Constitution to empower the Legislature to immunize co ricers and again, whether they are successful or not . an open question. I hope that anyone reading this paper win understand that it was not written for the purpose ofgiving answers to most of the questions that will have to be ruled upon. The purpose ofthe paper is to call to the attention ofthe trial bench some of the problems that they will be deal ing with and to cite some ofthe pertinent decisions both from our Court and from courts of other states. Addendum to Article on Co-Employee Liability This paper was prepared on the assumption that the cases of Hughes v. Newton, 295 Ala. 117, 324 So.2d 270) (a case tried by this writer and one in which the defendant owned all ofthe stock of the small corp.) and Queen City Furniture Co. v. Hinds, 274 Ala. 584, 150 So.2d 756, had decided the issue of the liability of an executive officer to an injured employee. In the McCormick decision the Court, with reference to the Queen City case, said: "We held that the president and principal stock holder of a corporation was covered by work men's compensation insurance. It would hardly be rational to hold that an officer ofa corporation was an employee in that case, but hold him to be an employer when an employee sues him for negli gence." Since preparing this paper, however, the Supreme Court has decided another case which throws doubt on the liability ofan executive officer. The style ofthe case \sJones v. Watkau, 13 ABR182 and I quote a partofthe opinion of Justice Embry: The Watkinses argue that under Grantham and subsequent decisions of this Court: "While the majority ofthe Court holds that the involved section of the code is unconstitu tional under Section 13 of the Constitution of Alabama of 1901, it is the contention of the Appellee, that as set forth in the dissenting opinion of Mr. Justice Maddox, that the Workmen's Compensation Act itself, pro vides the 'remedy* which Section 13 of the Constitution requires. In the instant ease, as in many cases, the supervisory personnel, are the president and vice president of a corpora tion, which is owned by them. Accordingly, the plaintiffin this case gets a double shot, one at the corp., which is owned by the individu als, and in fact, one and the same as the indi viduals. and then has another cause ofaction, against them in their individual capacity. " "The "involved" section of the code is that pan of Section 25-5-11. Code 1975, reading: [P]rovtdcd. however, that neither an officer, director, agent, servant or employee of the same employer nor his personal representative nor any workmen's compensation insurance carrier of the employer nor any officer, director, agent, servant TXTINER RMC0088130 19 or employes of such earner nor any labor union or any official or representative thereof making a safety inspection for the benefit of the employer or its employees shall be considered a party other than the employer against whom such an action may be brought. At the outset, we note that there is no evidence in the affidavits that the Watkinses are other than co employees. That being true, we have before us nothing different from the fact situation in Grantham. Thus, there is nothing in this record showing a bar to Jones' action. Under the pleadings and affidavits it is possible Jones might recover in his action. Benson v. Pachetti. 349 So.2d 17 (Ala. 1977). The case must, therefore, be reversed and remanded. For guidance of trial courts and litigants we observe that immunity of officers, directors, etc., was not raised in Grantham., nor was it addressed. Neither . was it properly raised, nor is it addressed here. Even ifit be assumed that officers, directors, etc., may be held immune from suit by an injured employee of the corpo ration without violating Section 13 of the Constitution of Alabama of 1901 there remains the question of whether he. or she, is immune from suit by the injured employee when standing in the shoes of the corporate entity as such. The answer to this question may well turn on the nature of the function or work being per formed by the officer or director who may then become a co-employee of the injured employee. Mount Pleas ant Mining Corp. v. Vermeulen, 117 Ind. App. 33, 65 N.E.2d 642 (1946). The North Carolina Supreme Court in Jones v. Planters' National Bank < Trust Co.. 206 N.C. 214.173 S.E. 595 (1934). held the test to be not the title of the person, but the nature and quality of the act he is performing. Although these cases deal with offi cers seeking employee status in order to claim work men's compensation, we find this test one which may be applicable in resolving the question implicit in the arguments, pro and coo. on the question ofwhether one holding a position as corporate officer, director, etc. may be legally immunized by the statute from suit by an injured corporate employee. An officer may exercise a dual ftinction and enjoy a dual capacity in a corporation. Depending on his, or her, functioa at the time ofinjury, he. or she. may not be immune from suit by an injured employee." Which ftinction the officer is fulfilling in a matter of fact. In small closely held corporations the likelihood of officers or directors acting as employees is greater than that in larger corporations. See In re Raynes. 66 Ind. App. 321. 118 N.E. 387(1917). Nevertheless, no evidence concerning the Wat kinses' functional role in the corporation at the time of Jones' injury is present in this case. Thejudgment of the circuit court must, therefore, be reversed and the cases remanded for farther proceedings not inconsistent with this opinion. It will be noted that a majority of the Court did noi concur in the opinion written by Justice Embry and what he said in that opinion, therefore, is not law. but it is reasonable to assume that he does represent the thinking of the majority of the Court. It, therefore, would appear that a factual determina tion will have to be made to determine whether or not an executive officer at the time he committed the negligent acts was, in fact, acting as a co-employee or as the employer of the plaintiff. 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