#### Maahs, Respondent, vs. Antigo Lumber Company and another, Appellants.

*January 15*

February *3, 1914.*

*Master and, servant: Injury: Settlement: Pleading: Election between causes of action: Employers’ liability insurance: Cancellation of policy: Rights of injured, employees: Corporations: Personal liability of manager: Appeal: Orders reviewable.*

1. Where, in an action for personal injuries to an employee, the complaint stated a cause of action for tort and also a cause of action based on an agreement for settlement, plaintiff had at least the right to elect to prove his cause of action for tort.

2. Evidence in such case which tended to show that a settlement of plaintiffs claim agreed upon between the parties was conditional upon approval thereof and payment of the amount by an employers’ liability insurance company, but which failed to show such approval or that the insurer paid the sum agreed upon on account of plaintiff’s injury, is *held*insufficient to show a settlement agreement.

3. There being no contractual relation between injured employees and a liability insurance company which has issued a policy to the employer, such company and the employer may agree to the surrender and cancellation of the policy on such terms as they see fit.

4. Where several actions by injured employees were pending when the employer and a company which had insured against such liability made an agreement whereby, upon payment of a certain sum to the employer, the policy was canceled, but there was nothing in the agreement whereby the money so paid was impressed with any trust in favor of any one, the plaintiff in one of said actions was not entitled to recover on the theory that a part of such money rightfully belonged to him.

5. In an action for personal injuries against a corporation and its president, a complaint alleging as to the latter that he owned *2all of the stock of the corporation except two shares held hy employees, that as president and manager he had full and absolute control and supervision of the operation of the sawmill in which plaintiff worked and of assigning employees to their respective duties, that it was the duty of defendants to provide safe and suitable machinery and to securely guard the gearing and shafting so located as to be dangerous, and that they failed in such duty, by reason whereof plaintiff was injured, is *field*to state a cause of action against such individual defendant.

6. There are cases in which the manager of a corporation is equally liable with it for its torts.

7. An order directing the payment of money into court to abide the result of the action becomes part of the judgment roll, and under sec. 2872, Stats., may be reviewed on an appeal from the judgment without any exception having been taken thereto.

Appeal from a judgment of the circuit court for Langlade county: John Goodland, Circuit' Judge.

*Reversed.*

The plaintiff, an employee of the *Antigo Lumber Com*pany, commenced an action against said company to recover $3,000 damages for a personal injury received in the course of his employment. Later a motion was made tQ amend the complaint. The proposed amendment set forth that one *O. G. Erickson*was the managing officer of the company and had full control and supervision of the operation of the mill and of assigning the employees to work on the various machines in the mill, and was personally liable to the plaintiff for his injury; that *Erickson*owned practically all of the stock in the corporation and that the hoard of directors therein consisted of himself and two employees in his office, and that he was practically the owner of the sawmill in which the plaintiff was injured. The amendment further set forth that the *Antigo Lumber Company*was hopelessly insolvent' since July, 1911; that at the time the plaintiff was injured the *Antigo Lumber Company*was insured in the iEtna Life Insurance Company against loss and damage by reason of injuries received by its employees; that the action *3was begun in June, 1911, and that thereafter some negotiations were bad in reference to settling the case; that in the month of October, 1911, an agreement' was made between the attorneys representing the plaintiff, and *Erickson*acting in his own behalf and in behalf of his codefendant, to settle the case for $1,000, provided the insurance company would approve of such settlement and furnish the money to make the payment; that the.insurance company believed the plaintiff had a valid claim against the *Antigo Lumber Compa/ny*and would eventually upon the trial of the case recover judgment against said company and that the insurance company would be liable therefor under its policy of insurance, and that said insurance company was ready and willing to settle and compromise the suit by paying the sum of $T,000 in compensation for the loss and damage sustained by the plaintiff; that said *Erickson•,*acting for himself and his co-defendant, instead of requesting the insurance company to compromise and settle the action upon the basis of the offer made by the plaintiff, as he agreed to do, entered into an agreement with the insurance company whereby the *Antigo Lumber Company*“did release and forever discharge said .¿Etna Life Insurance Company from all liability under said policy on account of personal injuries suffered by the plaintiff and for its ultimate liability to make compensation for the loss and damage so sustained by the plaintiff, on payment of $1,500 to him by said .¿Etna Life Insurance Company, and said *Erickson*thereupon accented and received the said sum of $1,500 from the .¿Etna Life Insurance Company and wrongfully and fraudulently appropriated the same to his own use and the use of the defendant *Antigo Lumber Company,*. . . and refused to pay or turn over said sum or any part or portion thereof tp the plaintiff.”

The proposed amendment further set forth that' the sum of $1,500 paid by the insurance company to the defendant was paid on account of and as compensation for the loss sus*4tained by the plaintiff and was intended by the insurance company to be in payment and discharge of its liability arising on account thereof under and by virtue of said policy of insurance^ and that $1,000 thereof rightfully and equitably belonged to the plaintiff and was received by the defendant *O. G. Erickson*as money belonging to the plaintiff. It was further alleged that the act of the defendants in making said settlement' with said insurance company and executing said release and discharge and in appropriating and diverting said moneys to their own use was wrong and unlawful; that said *Erickson*then and for a long time prior thereto well knew that' the *Antigo Lumber Compmy*was insolvent and that no judgment plaintiff might recover against the *Antigo Lumber Company*could be collected on execution or otherwise, and that' the settlement by said *Erickson*and the diversion of said money by him was made with intent wrongfully to cheat and defraud the plaintiff and wrongfully secure to himself and to said *Antigo Lumber Company*pecuniary profit and gain on account of their own negligence and wrongful acts in crippling and maiming the plaintiff.

Coupled with this motion to amend, the plaintiff also moved for an order requiring the defendants to pay into court *pendente lite*the sum of $1,500 received from the insurance company. The demand for judgment in the amended complaint, as in the original complaint, was for $3,000 damages for the injuries received. The motion to amend the complaint was granted, and the same order also required the defendants to pay the sum of $1,500 into court during the pendency of the action, and to abide the further order of the court.

The defendants answered separately to the complaint. *Th& Antigo Lumber Company*denied negligence on its part, and set up contributory negligence on the part of the plaintiff, admitted insurance in the .¿Etna Life Insurance Company, and alleged that it had no right of action against said *5insurance company until such time as judgment' was recovered by tbe employee claiming damages and such, judgment was paid by the defendant lumber company. The defendant *Erickson*answered, denying all liability on his part as well as most of the material allegations of the complaint.

On the issues thus made up the plaintiff sought to prove a cause of action in tort against the defendants. The court, after examining the pleadings, held that the only issue was whether or not' a settlement had been made, and refused t'o permit the plaintiff to go further than to show that' he was in the employ of the *Antigo Lumber Company*and was injured while in such employ and that the settlement of his claim was made and agreed upon.

The court also refused to permit the defendant to offer any evidence tending to show that there was no liability on the part of the *Antigo Lumber Company*for the injury which plaintiff received. The defendants’ evidence was confined to the issue of settlement. After hearing the evidence the court directed a verdict for the plaintiff against both of the defendants for $1,000, and defendants appeal from this judgment'.

The cause was submitted for the appellant *Antigo Lumber Company*on the brief of *Mor son <& Smelker;*for the appellant *Erickson*on that of *Henry Hay*and *F. J. Finucane;*and for the respondent on that of *Goodrich & Goodrich,*attorneys, and *T. W. Hogan,*of counsel.

To the point that there was no privity of contract between the employee and the insurance company, counsel for the appellant *Erickson*cited *Stenbom v. Brown-Corliss E. Co.*137 Wis. 564, 119 N. W. 308; *Ca/rter v. JEtna L. Ins. Co.*76 Kan. 275, 91 Pac. 178; *Connolly v. Bolster,*187 Mass. 266, 72 N. E. 981; *Bain v. Atkins,*181 Mass. 240, 63 N. E. 414.

Babees, J.

It would seem to have been the intention of the pleader to state a cause of action for tort in the amended *6complaint and to compel tbe defendants, because of tbe insolvency of tbe *Antigo Lumber Gomya/ny,*to pay tbe money received from tbe insurance company into court to tbe end that tbe same might' be applied in satisfaction or partial satisfaction of any judgment that might be recovered for tbe tort. Conceding that' a cause of action based on a settlement was also stated, tbe plaintiff at least bad tbe right to insist on proving bis cause of action in tort. He was not' even given tbe right of election, and in this we think tbe court was clearly in error. Tbe plaintiff, however, is seeking in this court' to sustain tbe judgment recovered, and if tbe evidence warranted tbe direction of tbe verdict returned tbe defendants have no cause for complaint.

However shady tbe transaction between *Erickson*and tbe insurance company may appear, and it does appear shady on *Erickson’s*part, we fail to see bow tbe ruling of tbe court in directing a verdict can be approved. This is so for two reasons: First, because tbe plaintiff’s evidence fails to show that a settlement was made, and; second, because there was ample evidence offered by tbe defendants tending to show that' a settlement was not' made, to warrant tbe jury in so finding.

Tbe evidence offered on behalf of tbe plaintiff tended to show that settlements of tbe claim of tbe plaintiff and of that of Grail were made with *Erickson*for $1,600, provided tbe insurance company would approve of tbe settlements and pay tbe amounts agreed upon, and that plaintiff was to recover $1,000 and Grail $600. Tbe plaintiff’s evidence did not show that the insurance company agreed to such settlements or either of them or that it paid tbe sum agreed upon on account of tbe injury which plaintiff received. In this respect tbe proof was insufficient and fell short of establishing a settlement agreement.

Tbe evidence of *Erickson*was to tbe effect that- be simply agreed to transmit any proposition for settlement which plaintiff or Grail might make to tbe insurance company, and *7that he was willing to settle on any basis ivhich was satisfactory to the insurer. He further testified that propositions t'o settle on the basis above stated were made to him and that the insurance company refused to consider the matter of settling with the plaintiff on any such basis.

A written contract' was made between *Erickson*and the insurance company whereby in consideration of $1,500 the insured agreed to surrender its policy of insurance and to relieve the insurer of all further liability thereon. The contract further provided that the *Antigo Lumber Company*should employ counsel and defend all personal injury actions pending against it, including those brought by the plaintiff and Grail. Upon the insistence of the insurance company there was paid out of the amount agreed upon to the attorney which the lumber company agreed to employ the sum of $442.18, and there was a further deduction of $57.82 made on account of unpaid premiums on the policy.

At' the time of the surrender of the policy there were three personal injury actions pending against the *Antigo Lumber*Company, one brought by the plaintiff to recover $3,000 damages, one brought by one Henry Larson to recover $25,000 damages, and one brought by Grail. The amount of damages claimed in the Grail case does not' appear, but it does appear that Grail was willing to settle for $600. It does not appear whether or not there were any other claims of a like nature on which suit' had not been brought.

There was no contractual relation between the injured employees of the *Antigo Lumber Company*and the insurance company. *Stenbom v. Brown-Corliss E. Co.*137 Wis. 564, 119 N. W. 308; *Carter v. Ætna L. Ins. Co.*76 Kan. 275, 91 Pac. 178. This being so, the parties to the insurance contract might agree to its surrender and cancellation on such terms as they saw fit. The amount actually paid to the defendants was $1,000. But treating the amount paid to the attorney as a payment to the defendants, still the sum turned over was $157.82 short of the amounts which plaint*8iff and Grail agreed to accept. Then it was manifest tbat the insurance company by its contract with the insured relieved itself from all liability on tbe $25,000 suit brought by Larson, as well as any other claims that might exist' on account of injuries received by the employees of the *Antigo Lumber Company.*It denied liability on. account of the *Maahs*and Grail claims as well as on account of the Larson claim. There was nothing in the contract between the insurer and the insured by which the money paid to the latter was impressed with any trust in favor of any one. *Bain v. Atkins,*181 Mass. 240, 63 N. E. 414. It is therefore quite clear that no case was made and no facts existed which would warrant a recovery upon the theory on which one was allowed.

The plaintiff should have been allowed to prove his cause of action in tort. It is not so clear that the complaint states a cause of action against *Briclcson.*There are of course cases in which the manager of a corporation is equally liable with it for its torts.

The complaint charged that *Briclcson*was the president and manager of the corporation and had full charge, management, control, and supervision of the erection, construction, and subsequent operation of the sawmill in which the plaintiff was injured; that said *Briclcson*acting as the president and manager had full and absolute control and supervision of the operation of the sawmill and of assigning employees to operate the various machines thereof and to fill the different positions necessary for operating and running the mill; that it was the duty of the defendants to provide safe and suitable machinery and appliances for the plaintiff’s use and to securely guard all gearing and shafting so located as to be dangerous to the plaintiff in the discharge of his duties; that the defendants provided machinery and appliances in the way of an unguarded gearing which was not safe and in which the plaintiff was. injured. The complaint further set forth that *Briclcson*was the practical owner of the sawmill, owning all of its stock *9except two shares which were held by two of the employees of the corporation.

We think, under the liberal rules adopted for the construction of pleadings, these allegations are broad enough to admit proof of facts which would warrant a jury in finding that *Erickson*was liable to the plaintiff for his injury as well as the *Antigo Lumber Company.*

The point is made that the order amending the summons and complaint and directing the payment' of $1,500 into court by the defendants cannot be reviewed because no appeal was taken therefrom within the time limited by law and because the same, with the exceptions taken thereto, was not incorporated in the bill of exceptions.

We do not decide that the order was not properly appealed from. It was part of the judgment roll under sec. 2898, St'ats. It could therefore be reviewed on an appeal from the judgment without any exception having been taken thereto. Sec. 2872, Stats.

*By the Court.*— So much of the order as directed the defendants to pay the sum of $1,500 into court is reversed. The judgment is reversed, and the cause is remanded for a new trial against both of the defendants.