American Nat. Ins. Co. v. Denke

Decision Date17 June 1936
Docket NumberNo. 2001-7050.,No. 2000-6703.,2000-6703.,2001-7050.
Citation95 S.W.2d 370
PartiesAMERICAN NAT. INS. CO. v. DENKE et al. SAME v. SHEPHERD et al.
CourtTexas Supreme Court

Two suits by E. J. Denke and another and by H. L. Shepherd and another against the American National Insurance Company. Judgments for plaintiffs in each case were affirmed by the Courts of Civil Appeals [65 S.W.(2d) 522 and 91 S.W. (2d) 439], and defendant brings error.

Reversed and rendered.

Frank S. Anderson, of Galveston, and Williams, Lee, Sears & Kennerly, W. H. Blades, and Sam R. Fisher, all of Houston, for plaintiff in error.

King, Wood & Morrow and H. Earl Cox, all of Houston, for defendants in error.

GERMAN, Commissioner.

These are companion cases. They grew out of the same accident and the controlling facts, so far as the question of liability of plaintiff in error is concerned, are identical. Both cases arose out of an accident in the city of Galveston on January 22, 1932. An automobile operated by one W. W. Saunders and owned by his wife was driven against Gerald Denke and against Jesse Foster Shepherd, causing serious personal injuries to each of them, and these suits followed. They were brought by the proper parties and in the proper manner. Judgments in favor of plaintiffs in each case for large sums of money were rendered in the district court. Both judgments were affirmed by the Courts of Civil Appeals. An opinion in the Denke Case is reported in 65 S.W.(2d) 522, 523, and in the Shepherd Case in 91 S.W.(2d) 439. All questions of negligence have been eliminated from the cases, and we have here for decision the sole question of whether or not at the time of the accident W. W. Saunders was acting in the capacity of a servant or employee of plaintiff in error, American National Insurance Company.

For the purposes of this decision, we adopt the statement of the material facts made by the Court of Civil Appeals in the Denke Case:

"The evidence establishes that at the time of the accident the appellant was engaged in writing industrial insurance, with premiums payable weekly, and also regular old line insurance. It had in its employment about twenty-five or thirty agents who were engaged principally in soliciting new insurance and collecting premiums on old policies. Saunders was one of such agents. For its purpose, the appellant had divided the city of Galveston into various blocks or territory called `debits,' and each of such agents was assigned to a `debit.' Such agent was required to spend the first three days of each week in collecting the weekly premiums due on policies in his `debit' and in locating prospects for new insurance. The remainder of the week was devoted to writing new policies. Saunders was under a written contract with the appellant by which he agreed, in part, as follows:

"`1. In consideration of my appointment as an agent of the American National Insurance Company, I hereby agree as follows:

"`2. To solicit new insurance and to collect premiums regularly every week. To obey the orders and to carry out the instructions of the company, and to use my best efforts to further its success.

"`3. To keep true accounts of the business in such books as may be furnished by the company, and to remit to the Home Office, every week, at the time required, and on the form furnished by the company, a true account of all money received by me, with the cash received by me during each week, less authorized deductions.

"`4. To pay all charges incident to sending moneys and parcels, postage, license or bond fees, and all other charges necessary to carry on the business of my agency, and I agree that out of any salary that may become due me the company shall first reimburse itself for any cost it may incur in furnishing me with a certificate of authority, license or other expense necessary to qualify me as agent, as imposed by the requirements of the State, County, City or Town in which I am to work.

"`5. To forward no applications except upon lives personally seen by me at the time the application is made, and believed by me to be in sound health.

"`6. To send to the Home Office each week with my account on the proper form a list of all policies upon which four weeks' premiums are due at the time of making up my account. * * *

"`9. To comply in all respects with the instructions and rules from time to time issued by the Company. * * *'

"Said contract further provided that `the agent will be paid a salary as follows: "Fifteen per cent of the amount collected each week on debit."' In addition, the agent was allowed certain commissions on all new policies written by him and certain other commissions on the net increase of business in his debit. The commissions due him were not retained by him out of collections made, but all such collections were turned into the company, and the agent was paid the amount due him on each Saturday. The contract required him to account to the company on Monday of each week for all sums collected, but the company reserved the right to demand an accounting on any other day and as often as desired. The company could discharge him at will without notice. There was evidence to the effect that such agents were required to distribute literature in their territory advertising the business of the company. They were required to report to the office of the company at 7:30 each morning for the purpose of receiving a list of the premiums to be collected and instructions with reference to their work. They were divided into groups of six or seven each, and each group was under the supervision of an assistant superintendent. At these meetings, called `staff meetings,' the superintendent first gave general instructions, and then each assistant superintendent gave more definite instructions to his group with reference to how to collect the premiums and write new insurance. If an agent reported that he had failed to make certain collections, the assistant superintendent would give directions as to how to make the collection. Each agent was given a list of the premiums to be collected, together with the route to be followed or the order in which the debtors were to be called upon. Thursday, Friday, and Saturday of each week was devoted to writing new insurance. On these days, after attending the `staff meeting' in the morning, the agent went to work at 8 a. m., and worked until 11 a. m., and began work again at 1 or 1:30 in the afternoon and worked until 4 or 5 o'clock. He was required to attend another `staff meeting' at the office at 5:30 p. m., at which time he reported what success he had had during the day and his reasons for not writing more insurance. One of the agents testified that at such meeting `the assistant superintendent usually asked us how much we had written today and why we didn't write some more and how did we happen to fall down and how many calls we were going to make that night. He did not always ask why we had fallen down in those words, but more or less to that effect. Once or twice he had a nice word for you. If you really wrote some business they would kind of smile. If you went out and didn't write it they would smile but there was a sort of a hard line around that smile.' After receiving such instructions at the evening `staff meetings' and after eating their dinners, the agents were required to return to the field of their work and solicit insurance for a few hours each night. Sometimes the assistant superintendent would require them to work in groups of twos or threes or in such other manner as he saw fit. Sometimes a more experienced agent was required to work with a less experienced one for the purpose of giving instructions to the new agent.

"The accident in question occurred on Friday afternoon. On the morning of that day Saunders attended the usual `staff meeting' at 7:30, and in compliance with instructions from his assistant superintendent he spent the remainder of the morning until 11 a. m. soliciting insurance with a new agent named Johnson in Johnson's `debit.' About 11 o'clock he separated from Johnson and went to solicit prospects in his own territory. That afternoon, after soliciting prospects in his own territory until about 4 p. m., he started in an automobile to another part of the city to a territory usually worked by another agent named Kries. It appears that Kries was a new agent, and that Saunders had been required to work with him in Kries' territory a few days prior thereto, and while so working Saunders had secured the names of some prospects. While on his way from his home to visit these prospects in Kries' territory for the purpose of selling them some insurance, he ran the automobile in which he was riding over Gerald Denke, inflicting the injury above indicated. The appellant did not furnish Saunders an automobile to use in the business, nor require him to use an automobile, but the evidence shows that Saunders did frequently use his wife's automobile for that purpose, with the knowledge and acquiescence of the appellant. He was so using his wife's automobile at the time of the accident."

We may add, however, that plaintiff in error seriously questions the statement that Saunders had frequently used his wife's automobile "with the knowledge and acquiescence of the appellant"; and may further add that there was nothing in the contract, either actually, or as construed by the parties, which in any way sought to control Saunders in his physical movements while doing his work, or directing that he should or should not travel by automobile, street car, cab, or on foot or otherwise.

The importance of the question decided in these cases has not been minimized. Counsel for all parties have furnished the court with comprehensive and able briefs. In addition to considering the authorities cited, we have given the matter...

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